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FRANCISCO VS. NLRC ET AL 2. Whether petitioner was illegally dismissed.

FACTS: RULING:
1995, Petitioner was hired by Kasei Corporation during its incorporation stage. 1. Generally, courts have relied on the so-called right of control test where
She was designated as Accountant and Corporate Secretary and was assigned to the person for whom the services are performed reserves a right to
handle all the accounting needs of the company. She was also designated as control not only the end to be achieved but also the means to be used in
Liaison Officer to the City of Makati to secure business permits, construction reaching such end. In addition to the standard of right-of-control, the
permits and other licenses for the initial operation of the company. existing economic conditions prevailing between the parties, like the
inclusion of the employee in the payrolls, can help in determining the
Although she was designated as Corporate Secretary, she was not entrusted with existence of an employer-employee relationship.
the corporate documents; neither did she attend any board meeting nor required
to do so. She never prepared any legal document and never represented the There are instances when, aside from the employer’s power to control the
company as its Corporate Secretary. 1996, petitioner was designated Acting employee, economic realities of the employment relations help provide a
Manager. Petitioner was assigned to handle recruitment of all employees and comprehensive analysis of the true classification of the individual, whether as
perform management administration functions; represent the company in all employee, independent contractor, corporate officer or some other capacity.
dealings with government agencies, especially with the BIR, SSS and in the city
government of Makati; and to administer all other matters pertaining to the It is better, therefore, to adopt a two-tiered test involving: (1) the employer’s
operation of Kasei Restaurant which is owned and operated by Kasei power to control; and (2) the economic realities of the activity or relationship.
Corporation. The control test means that there is an employer-employee relationship when the
January 2001, petitioner was replaced by a certain Liza R. Fuentes as Manager. person for whom the services are performed reserves the right to control not only
Kasei Corporation reduced her salary, she was not paid her mid-year bonus the end achieved but also the manner and means used to achieve that end.
allegedly because the company was not earning well. On October 2001, There has to be analysis of the totality of economic circumstances of the worker.
petitioner did not receive her salary from the company. She made repeated Thus, the determination of the relationship between employer and employee
follow-ups with the company cashier but she was advised that the company was depends upon the circumstances of the whole economic activity, such as: (1) the
not earning well. Eventually she was informed that she is no longer connected extent to which the services performed are an integral part of the employer’s
with the company. business; (2) the extent of the worker’s investment in equipment and facilities;
Since she was no longer paid her salary, petitioner did not report for work and (3) the nature and degree of control exercised by the employer; (4) the worker’s
filed an action for constructive dismissal before the labor arbiter. Private opportunity for profit and loss; (5) the amount of initiative, skill, judgment or
respondents averred that petitioner is not an employee of Kasei Corporation. foresight required for the success of the claimed independent enterprise; (6) the
They alleged that petitioner was hired in 1995 as one of its technical consultants permanency and duration of the relationship between the worker and the
on accounting matters and act concurrently as Corporate Secretary. As technical employer; and (7) the degree of dependency of the worker upon the employer for
consultant, petitioner performed her work at her own discretion without control his continued employment in that line of business. The proper standard of
and supervision of Kasei Corporation. Petitioner had no daily time record and economic dependence is whether the worker is dependent on the alleged
she came to the office any time she wanted and that her services were only employer for his continued employment in that line of business
temporary in nature and dependent on the needs of the corporation. By applying the control test, it can be said that petitioner is an employee of
The Labor Arbiter found that petitioner was illegally dismissed, NLRC affirmed Kasei Corporation because she was under the direct control and supervision of
with modification the Decision of the Labor Arbiter. On appeal, CA reversed the Seiji Kamura, the corporation’s Technical Consultant. She reported for work
NLRC decision. CA denied petitioner’s MR, hence, the present recourse. regularly and served in various capacities as Accountant, Liaison Officer,
Technical Consultant, Acting Manager and Corporate Secretary, with
ISSUES: substantially the same job functions, that is, rendering accounting and tax
services to the company and performing functions necessary and desirable for
1. WON there was an employer-employee relationship between petitioner the proper operation of the corporation such as securing business permits and
and private respondent; and if in the affirmative, other licenses over an indefinite period of engagement. Respondent corporation
BAUTISTA, Coleen Joyce Q. Page 1 of 58
had the power to control petitioner with the means and methods by which the The Labor Arbiter dismissed the complaint and found that there is no employee-
work is to be accomplished. employer relationship. NLRC affirmed the decision of the Labor Arbiter. CA
also affirmed the decision of NLRC.
Under the economic reality test, the petitioner can also be said to be an employee
of respondent corporation because she had served the company for 6 yrs. before Issue: Whether or not there was employer-employee relationship between the
her dismissal, receiving check vouchers indicating her salaries/wages, benefits, parties.
13th month pay, bonuses and allowances, as well as deductions and Social
Security contributions from. When petitioner was designated General Manager, Ruling: Case law has consistently held that the elements of an employee-
respondent corporation made a report to the SSS. Petitioner’s membership in the employer relationship are selection and engagement of the employee, the
SSS evinces the existence of an employer-employee relationship between payment of wages, the power of dismissal and the employer’s power to control
petitioner and respondent corporation. The coverage of Social Security Law is the employee on the means and methods by which the work is accomplished.
predicated on the existence of an employer-employee relationship. The last element, the so-called "control test", is the most important element.

2. The corporation constructively dismissed petitioner when it reduced Sonza’s services to co-host its television and radio programs are because of his
her. This amounts to an illegal termination of employment, where the peculiar talents, skills and celebrity status. Independent contractors often present
petitioner is entitled to full backwages themselves to possess unique skills, expertise or talent to distinguish them from
ordinary employees. The specific selection and hiring of SONZA, because of his
A diminution of pay is prejudicial to the employee and amounts to constructive unique skills, talent and celebrity status not possessed by ordinary employees, is
dismissal. Constructive dismissal is an involuntary resignation resulting in a circumstance indicative, but not conclusive, of an independent contractual
cessation of work resorted to when continued employment becomes impossible, relationship. All the talent fees and benefits paid to SONZA were the result of
unreasonable or unlikely; when there is a demotion in rank or a diminution in negotiations that led to the Agreement. For violation of any provision of the
pay; or when a clear discrimination, insensibility or disdain by an employer Agreement, either party may terminate their relationship. Applying the control
becomes unbearable to an employee. Petition is GRANTED. test to the present case, we find that SONZA is not an employee but an
independent contractor.
The control test is the most important test our courts apply in distinguishing an
SONZA vs. ABS-CBN employee from an independent contractor. This test is based on the extent of
control the hirer exercises over a worker. The greater the supervision and control
Facts: In May 1994, ABS-CBN signed an agreement with the Mel and Jay
the hirer exercises, the more likely the worker is deemed an employee. The
Management and Development Corporation (MJMDC). ABS-CBN was
converse holds true as well – the less control the hirer exercises, the more likely
represented by its corporate officers while MJMDC was represented by Sonza,
the worker is considered an independent contractor. To perform his work,
as President and general manager, and Tiangco as its EVP and treasurer.
SONZA only needed his skills and talent. How SONZA delivered his lines,
Referred to in the agreement as agent, MJMDC agreed to provide Sonza’s
appeared on television, and sounded on radio were outside ABS-CBN’s control.
services exclusively to ABS-CBN as talent for radio and television. ABS-CBN
ABS-CBN did not instruct SONZA how to perform his job. ABS-CBN merely
agreed to pay Sonza a monthly talent fee of P310, 000 for the first year and
reserved the right to modify the program format and airtime schedule "for more
P317, 000 for the second and third year.
effective programming." ABS-CBN’s sole concern was the quality of the shows
On April 1996, Sonza wrote a letter to ABS-CBN where he irrevocably resigned and their standing in the ratings.
in view of the recent events concerning his program and career. After the said
Clearly, ABS-CBN did not exercise control over the means and methods of
letter, Sonza filed with the Department of Labor and Employment a complaint
performance of Sonza’s work. A radio broadcast specialist who works under
alleging that ABS-CBN did not pay his salaries, separation pay, service incentive
minimal supervision is an independent contractor. Sonza’s work as television
pay,13th month pay, signing bonus, travel allowance and amounts under the
and radio program host required special skills and talent, which SONZA
Employees Stock Option Plan (ESOP). ABS-CBN contended that no employee-
admittedly possesses.
employer relationship existed between the parties. However, ABS-CBN
continued to remit Sonza’s monthly talent fees but opened another account for ABS-CBN claims that there exists a prevailing practice in the broadcast and
the same purpose. entertainment industries to treat talents like Sonza as independent contractors.
The right of labor to security of tenure as guaranteed in the Constitution arises
BAUTISTA, Coleen Joyce Q. Page 2 of 58
only if there is an employer-employee relationship under labor laws. Individuals relationship of an employer and an employee was determined by law and the
with special skills, expertise or talent enjoy the freedom to offer their services as same would prevail whatever the parties may call it. Finding Javier to be a
independent contractors. The right to life and livelihood guarantees this freedom regular employee, the NLRC ruled that he was entitled to a security of tenure.
to contract as independent contractors. The right of labor to security of tenure For failing to present proof of a valid cause for his termination, Fly Ace was
cannot operate to deprive an individual, possessed with special skills, expertise found to be liable for illegal dismissal of Javier who was likewise entitled to
and talent, of his right to contract as an independent contractor. backwages and separation pay in lieu of reinstatement. However, on appeal, CA
reversed the ruling of NLRC

The CA ruled that Javiers failure to present salary vouchers, payslips, or other
pieces of evidence to bolster his contention, pointed to the inescapable
BITOY JAVIER (DANILO P. JAVIER), Petitioner, v. FLY ACE
conclusion that he was not an employee of Fly Ace. Further, it found that Javiers
CORPORATION and FLORDELYN CASTILLO, Respondents.
work was not necessary and desirable to the business or trade of the company, as

 it was only when there were scheduled deliveries, which a regular hauling
FACTS: Javier an employee of Fly Ace performing various work for the latter service could not deliver, that Fly Ace would contract the services of Javier as an
filed a complaint before the NLRC for underpayment of salaries and other labor extra helper. Lastly, the CA declared that the facts alleged by Javier did not pass
standard benefits.
 the control test.

He alleged that he reported for work from Monday to Saturday from 7:00 oclock He contracted work outside the company premises; he was not required to
in the morning to 5:00 oclock in the afternoon; that during his employment, he observe definite hours of work; he was not required to report daily; and he was
was not issued an identification card and pay slips by the company; that he free to accept other work elsewhere as there was no exclusivity of his contracted
reported for work but he was no longer allowed to enter the company premises service to the company, the same being co-terminous with the trip only. Since no
by the security guard upon the instruction of Ruben Ong (Mr. Ong), his superior; substantial evidence was presented to establish an employer-employee
that after several minutes of begging to the guard to allow him to enter, he saw relationship, the case for illegal dismissal could not prosper. Hence, this appeal.

Ong whom he approached and asked why he was being barred from entering the 

premises; that Ong replied by saying, Tanungin mo anak mo;that he discovered ISSUE:

that Ong had been courting his daughter Annalyn after the two met at a fiesta 

celebration in Malabon City; that Annalyn tried to talk to Ong and convince him Does an employer-employee relationship exist between Javier and Fly Ace,
to spare her father from trouble but he refused to accede; that thereafter, Javier thereby holding the latter guilty of illegal dismissal?
was terminated from his employment without notice; and that he was neither
HELD: As the records bear out, the LA and the CA found Javiers claim of
given the opportunity to refute the cause/s of his dismissal from work.

employment with Fly Ace as wanting and deficient. The Court is constrained to
For its part p, Fly Ace denied the existence of employer-employee relationship
agree. Labor officials are enjoined to use reasonable means to ascertain the facts
between them and Javier as the latter was only called roughly 5 to 6 times only
speedily and objectively with little regard to technicalities or formalities but
in a month whenever the vehicle of its contracted hauler, Milmar Hauling
nowhere in the rules are they provided a license to completely discount
Services, was not available. Labor Arbiter dismissed the complaint ruling that
evidence, or the lack of it. The quantum of proof required, however, must still be
respondent Fly Ace is not engaged in trucking business but in the importation
satisfied. Hence, when confronted with conflicting versions on factual matters, it
and sales of groceries. Since there is a regular hauler to deliver its products, we
is for them in the exercise of discretion to determine which party deserves
give credence to Respondents claim that complainant was contracted on pakiao
credence on the basis of evidence received, subject only to the requirement that
basis.

their decision must be supported by substantial evidence.Accordingly, the
On appeal, NLRC reversed the decisin of the LA. It was of the view that a
petitioner needs to show by substantial evidence that he was indeed an employee
pakyaw-basis arrangement did not preclude the existence of employer-employee
of the company against which he claims illegal dismissal.

relationship. Payment by result x x x is a method of compensation and does not
In sum, the rule of thumb remains: the onus probandi falls on petitioner to
define the essence of the relation. It is a mere method of computing
establish or substantiate such claim by the requisite quantum of evidence.
compensation, not a basis for determining the existence or absence of an
Whoever claims entitlement to the benefits provided by law should establish his
employer-employee relationship. The NLRC further averred that it did not
or her right thereto x x x. Sadly, Javier failed to adduce substantial evidence as
follow that a worker was a job contractor and not an employee, just because the
basis for the grant of relief.

work he was doing was not directly related to the employers trade or business or
By way of evidence on this point, all that Javier presented were his self-serving
the work may be considered as extra helper as in this case; and that the
BAUTISTA, Coleen Joyce Q. Page 3 of 58
statements purportedly showing his activities as an employee of Fly Ace. Sometime in 1983 and 1984, SanMig entered into contracts for merchandising
Clearly, Javier failed to pass the substantiality requirement to support his claim. services with Lipercon and D'Rite (Annexes K and I, SanMig's Comment,
Hence, the Court sees no reason to depart from the findings of the CA.
 respectively). These companies are independent contractors duly licensed by the

 Department of Labor and Employment (DOLE). SanMig entered into those
While Javier remains firm in his position that as an employed stevedore of Fly contracts to maintain its competitive position and in keeping with the
Ace, he was made to work in the company premises during weekdays arranging imperatives of efficiency, business expansion and diversity of its operation. In
and cleaning grocery items for delivery to clients, no other proof was submitted said contracts, it was expressly understood and agreed that the workers
to fortify his claim. The lone affidavit executed by one Bengie Valenzuela was employed by the contractors were to be paid by the latter and that none of them
unsuccessful in strengthening Javiers cause.
 were to be deemed employees or agents of SanMig. There was to be no
The Court is of the considerable view that on Javier lies the burden to pass the employer-employee relation between the contractors and/or its workers, on the
well-settled tests to determine the existence of an employer-employee one hand, and SanMig on the other.
relationship, viz: (1) the selection and engagement of the employee; (2) the
payment of wages; (3) the power of dismissal; and (4) the power to control the Petitioner San Miguel Corporation Employees Union-PTWGO (the Union, for
employees conduct. Of these elements, the most important criterion is whether brevity) is the duly authorized representative of the monthly paid rank-and-file
the employer controls or has reserved the right to control the employee not only employees of SanMig with whom the latter executed a Collective Bargaining
as to the result of the work but also as to the means and methods by which the Agreement (CBA) effective 1 July 1986 to 30 June 1989 (Annex A, SanMig's
result is to be accomplished.
 Comment). Section 1 of their CBA specifically provides that "temporary,
DENIED probationary, or contract employees and workers are excluded from the
bargaining unit and, therefore, outside the scope of this Agreement."
In a letter, dated 20 November 1988 (Annex C, Petition), the Union advised
SAN MIGUEL CORPORATION EMPLOYEES UNION-PTGWO, SanMig that some Lipercon and D'Rite workers had signed up for union
DANIEL S.L. BORBON II, HERMINIA REYES, MARCELA membership and sought the regularization of their employment with SMC. The
PURIFICACION, ET AL., petitioners, 
 Union alleged that this group of employees, while appearing to be contractual
vs.
 workers supposedly independent contractors, have been continuously working
HON. JESUS G. BERSAMIRA, IN HIS CAPACITY AS PRESIDING for SanMig for a period ranging from six (6) months to fifteen (15) years and
JUDGE OF BRANCH 166, RTC, PASIG, and SAN MIGUEL that their work is neither casual nor seasonal as they are performing work or
CORPORATION, respondents. activities necessary or desirable in the usual business or trade of SanMig. Thus,
it was contended that there exists a "labor-only" contracting situation. It was then
MELENCIO-HERRERA, J.: demanded that the employment status of these workers be regularized.
Respondent Judge of the Regional Trial Court of Pasig, Branch 166, is taken to On 12 January 1989 on the ground that it had failed to receive any favorable
task by petitioners in this special civil action for certiorari and Prohibition for response from SanMig, the Union filed a notice of strike for unfair labor
having issued the challenged Writ of Preliminary Injunction on 29 March 1989 practice, CBA violations, and union busting (Annex D, Petition).
in Civil Case No. 57055 of his Court entitled "San Miguel Corporation vs.
SMCEU-PTGWO, et als." On 30 January 1989, the Union again filed a second notice of strike for unfair
labor practice (Annex F, Petition).
Petitioners' plea is that said Writ was issued without or in excess of jurisdiction
and with grave abuse of discretion, a labor dispute being involved. Private As in the first notice of strike. Conciliatory meetings were held on the second
respondent San Miguel Corporation (SanMig. for short), for its part, defends the notice. Subsequently, the two (2) notices of strike were consolidated and several
Writ on the ground of absence of any employer-employee relationship between it conciliation conferences were held to settle the dispute before the National
and the contractual workers employed by the companies Lipercon Services, Inc. Conciliation and Mediation Board (NCMB) of DOLE (Annex G, Petition).
(Lipercon) and D'Rite Service Enterprises (D'Rite), besides the fact that the
Union is bereft of personality to represent said workers for purposes of Beginning 14 February 1989 until 2 March 1989, series of pickets were staged
collective bargaining. The Solicitor General agrees with the position of SanMig. by Lipercon and D'Rite workers in various SMC plants and offices.

The antecedents of the controversy reveal that:


BAUTISTA, Coleen Joyce Q. Page 4 of 58
On 6 March 1989, SMC filed a verified Complaint for Injunction and Damages respondent Court issued the questioned Order (Annex A, Petition) granting the
before respondent Court to enjoin the Union from: application and enjoining the Union from Committing the acts complained
of, supra. Accordingly, on 29 March 1989, respondent Court issued the
a. representing and/or acting for and in behalf of the employees of LIPERCON corresponding Writ of Preliminary Injunction after SanMig had posted the
and/or D'RITE for the purposes of collective bargaining; required bond of P100,000.00 to answer for whatever damages petitioners may
sustain by reason thereof.
b. calling for and holding a strike vote, to compel plaintiff to hire the employees
or workers of LIPERCON and D'RITE; In issuing the Injunction, respondent Court rationalized:
c. inciting, instigating and/or inducing the employees or workers of LIPERCON The absence of employer-employee relationship negates the existence of labor
and D'RITE to demonstrate and/or picket at the plants and offices of plaintiff dispute. Verily, this court has jurisdiction to take cognizance of plaintiff's
within the bargaining unit referred to in the CBA,...; grievance.
d. staging a strike to compel plaintiff to hire the employees or workers of The evidence so far presented indicates that plaintiff has contracts for services
LIPERCON and D'RITE; with Lipercon and D'Rite. The application and contract for employment of the
defendants' witnesses are either with Lipercon or D'Rite. What could be
e. using the employees or workers of LIPERCON AND D'RITE to man the
discerned is that there is no employer-employee relationship between plaintiff
strike area and/or picket lines and/or barricades which the defendants may set up
and the contractual workers employed by Lipercon and D'Rite. This, however,
at the plants and offices of plaintiff within the bargaining unit referred to in the
does not mean that a final determination regarding the question of the existence
CBA ...;
of employer-employee relationship has already been made. To finally resolve
f. intimidating, threatening with bodily harm and/or molesting the other this dispute, the court must extensively consider and delve into the manner of
employees and/or contract workers of plaintiff, as well as those persons lawfully selection and engagement of the putative employee; the mode of payment of
transacting business with plaintiff at the work places within the bargaining unit wages; the presence or absence of a power of dismissal; and the Presence or
referred to in the CBA, ..., to compel plaintiff to hire the employees or workers absence of a power to control the putative employee's conduct. This necessitates
of LIPERCON and D'RITE; a full-blown trial. If the acts complained of are not restrained, plaintiff would,
undoubtedly, suffer irreparable damages. Upon the other hand, a writ of
g. blocking, preventing, prohibiting, obstructing and/or impeding the free ingress injunction does not necessarily expose defendants to irreparable damages.
to, and egress from, the work places within the bargaining unit referred to in the
CBA .., to compel plaintiff to hire the employees or workers of LIPERCON and Evidently, plaintiff has established its right to the relief demanded. (p. 21, Rollo)
D'RITE;
Anchored on grave abuse of discretion, petitioners are now before us seeking
h. preventing and/or disrupting the peaceful and normal operation of plaintiff at nullification of the challenged Writ. On 24 April 1989, we issued a Temporary
the work places within the bargaining unit referred to in the CBA, Annex 'C' Restraining Order enjoining the implementation of the Injunction issued by
hereof, to compel plaintiff to hire the employees or workers of LIPERCON and respondent Court. The Union construed this to mean that "we can now strike,"
D'RITE. (Annex H, Petition) which it superimposed on the Order and widely circulated to entice the Union
membership to go on strike. Upon being apprised thereof, in a Resolution of 24
Respondent Court found the Complaint sufficient in form and substance and May 1989, we required the parties to "RESTORE the status quo ante declaration
issued a Temporary Restraining Order for the purpose of maintaining the status of strike" (p. 2,62 Rollo).
quo, and set the application for Injunction for hearing.
In the meantime, however, or on 2 May 1989, the Union went on strike.
In the meantime, on 13 March 1989, the Union filed a Motion to Dismiss Apparently, some of the contractual workers of Lipercon and D'Rite had been
SanMig's Complaint on the ground of lack of jurisdiction over the case/nature of laid off. The strike adversely affected thirteen (13) of the latter's plants and
the action, which motion was opposed by SanMig. That Motion was denied by offices.
respondent Judge in an Order dated 11 April 1989.
On 3 May 1989, the National Conciliation and Mediation Board (NCMB) called
After several hearings on SanMig's application for injunctive relief, where the the parties to conciliation. The Union stated that it would lift the strike if the
parties presented both testimonial and documentary evidence on 25 March 1989, thirty (30) Lipercon and D'Rite employees were recalled, and discussion on their
BAUTISTA, Coleen Joyce Q. Page 5 of 58
other demands, such as wage distortion and appointment of coordinators, were C. Civil courts have the jurisdiction to enjoin the above because this specie of
made. Effected eventually was a Memorandum of Agreement between SanMig strike does not arise out of a labor dispute, is an abuse of right, and violates the
and the Union that "without prejudice to the outcome of G.R. No. 87700 (this employer's constitutional liberty to hire or not to hire. (SanMig's Memorandum,
case) and Civil Case No. 57055 (the case below), the laid-off individuals ... shall pp. 475-476, Rollo).
be recalled effective 8 May 1989 to their former jobs or equivalent positions
under the same terms and conditions prior to "lay-off" (Annex 15, SanMig We find the Petition of a meritorious character.
Comment). In turn, the Union would immediately lift the pickets and return to A "labor dispute" as defined in Article 212 (1) of the Labor Code includes "any
work. controversy or matter concerning terms and conditions of employment or the
After an exchange of pleadings, this Court, on 12 October 1989, gave due course association or representation of persons in negotiating, fixing, maintaining,
to the Petition and required the parties to submit their memoranda changing, or arranging the terms and conditions of employment, regardless of
simultaneously, the last of which was filed on 9 January 1990. whether the disputants stand in the proximate relation of employer and
employee."
The focal issue for determination is whether or not respondent Court correctly
assumed jurisdiction over the present controversy and properly issued the Writ While it is SanMig's submission that no employer-employee relationship exists
of Preliminary Injunction to the resolution of that question, is the matter of between itself, on the one hand, and the contractual workers of Lipercon and
whether, or not the case at bar involves, or is in connection with, or relates to a D'Rite on the other, a labor dispute can nevertheless exist "regardless of whether
labor dispute. An affirmative answer would bring the case within the original the disputants stand in the proximate relationship of employer and
and exclusive jurisdiction of labor tribunals to the exclusion of the regular employee" (Article 212 [1], Labor Code, supra) provided the controversy
Courts. concerns, among others, the terms and conditions of employment or a "change"
or "arrangement" thereof (ibid). Put differently, and as defined by law, the
Petitioners take the position that 'it is beyond dispute that the controversy in the existence of a labor dispute is not negative by the fact that the plaintiffs and
court a quo involves or arose out of a labor dispute and is directly connected or defendants do not stand in the proximate relation of employer and employee.
interwoven with the cases pending with the NCMB-DOLE, and is thus beyond
the ambit of the public respondent's jurisdiction. That the acts complained of That a labor dispute, as defined by the law, does exist herein is evident. At
(i.e., the mass concerted action of picketing and the reliefs prayed for by the bottom, what the Union seeks is to regularize the status of the employees
private respondent) are within the competence of labor tribunals, is beyond contracted by Lipercon and D'Rite in effect, that they be absorbed into the
question" (pp. 6-7, Petitioners' Memo). working unit of SanMig. This matter definitely dwells on the working
relationship between said employees vis-a-vis SanMig. Terms, tenure and
On the other hand, SanMig denies the existence of any employer-employee conditions of their employment and the arrangement of those terms are thus
relationship and consequently of any labor dispute between itself and the Union. involved bringing the matter within the purview of a labor dispute. Further, the
SanMig submits, in particular, that "respondent Court is vested with jurisdiction Union also seeks to represent those workers, who have signed up for Union
and judicial competence to enjoin the specific type of strike staged by petitioner membership, for the purpose of collective bargaining. SanMig, for its part,
union and its officers herein complained of," for the reasons that: resists that Union demand on the ground that there is no employer-employee
relationship between it and those workers and because the demand violates the
A. The exclusive bargaining representative of an employer unit cannot strike to terms of their CBA. Obvious then is that representation and association, for the
compel the employer to hire and thereby create an employment relationship with purpose of negotiating the conditions of employment are also involved. In fact,
contractual workers, especially were the contractual workers were recognized by the injunction sought by SanMig was precisely also to prevent such
the union, under the governing collective bargaining agreement, as excluded representation. Again, the matter of representation falls within the scope of a
from, and therefore strangers to, the bargaining unit. labor dispute. Neither can it be denied that the controversy below is directly
connected with the labor dispute already taken cognizance of by the NCMB-
B. A strike is a coercive economic weapon granted the bargaining representative
DOLE (NCMB-NCR- NS-01- 021-89; NCMB NCR NS-01-093-83).
only in the event of a deadlock in a labor dispute over 'wages, hours of work and
all other and of the employment' of the employees in the unit. The union leaders Whether or not the Union demands are valid; whether or not SanMig's contracts
cannot instigate a strike to compel the employer, especially on the eve of with Lipercon and D'Rite constitute "labor-only" contracting and, therefore, a
certification elections, to hire strangers or workers outside the unit, in the hope regular employer-employee relationship may, in fact, be said to exist; whether or
the latter will help re-elect them.
BAUTISTA, Coleen Joyce Q. Page 6 of 58
not the Union can lawfully represent the workers of Lipercon and D'Rite in their right to strike in accordance with law (Section 3, Article XIII, 1987 Constitution)
demands against SanMig in the light of the existing CBA; whether or not the equally call for recognition and protection. Those contending interests must be
notice of strike was valid and the strike itself legal when it was allegedly placed in proper perspective and equilibrium.
instigated to compel the employer to hire strangers outside the working unit; —
those are issues the resolution of which call for the application of labor laws, and WHEREFORE, the Writ of certiorari is GRANTED and the Orders of
SanMig's cause's of action in the Court below are inextricably linked with those respondent Judge of 25 March 1989 and 29 March 1989 are SET ASIDE. The
issues. Writ of Prohibition is GRANTED and respondent Judge is enjoined from taking
any further action in Civil Case No. 57055 except for the purpose of dismissing
The precedent in Layno vs. de la Cruz (G.R. No. L-29636, 30 April 1965, 13 it. The status quo ante declaration of strike ordered by the Court on 24 May 1989
SCRA 738) relied upon by SanMig is not controlling as in that case there was no shall be observed pending the proceedings in the National Conciliation
controversy over terms, tenure or conditions, of employment or the Mediation Board-Department of Labor and Employment, docketed as NCMB-
representation of employees that called for the application of labor laws. In that NCR-NS-01-02189 and NCMB-NCR-NS-01-093-83. No costs.
case, what the petitioning union demanded was not a change in working terms
and conditions, or the representation of the employees, but that its members be
hired as stevedores in the place of the members of a rival union, which Locsin v PLDT
petitioners wanted discharged notwithstanding the existing contract of the
arrastre company with the latter union. Hence, the ruling therein, on the basis of The Case
those facts unique to that case, that such a demand could hardly be considered a
labor dispute. This Petition for Review on Certiorari under Rule 45 seeks the reversal of the
May 6, 2008 Decision[1] and November 4, 2008 Resolution[2] of the Court of
As the case is indisputably linked with a labor dispute, jurisdiction belongs to Appeals (CA) in CA-G.R. SP No. 97398, entitled Philippine Long Distance
the labor tribunals. As explicitly provided for in Article 217 of the Labor Code, Telephone Company v. National Labor Relations Commission, Raul G. Locsin
prior to its amendment by R.A. No. 6715 on 21 March 1989, since the suit below and Eddie B. Tomaquin. The assailed decision set aside the Resolutions of the
was instituted on 6 March 1989, Labor Arbiters have original and exclusive National Labor Relations Commission (NLRC) dated October 28,
jurisdiction to hear and decide the following cases involving all workers 2005 and August 28, 2006 which in turn affirmed the Decision dated February
including "1. unfair labor practice cases; 2. those that workers may file involving 13, 2004 of the Labor Arbiter. The assailed resolution, on the other hand, denied
wages, hours of work and other terms and conditions of employment; ... and 5. petitioners motion for reconsideration of the assailed decision.
cases arising from any violation of Article 265 of this Code, including questions
involving the legality of striker and lockouts. ..." Article 217 lays down the plain The Facts
command of the law.
On November 1, 1990, respondent Philippine Long Distance Telephone
The claim of SanMig that the action below is for damages under Articles 19, 20 Company (PLDT) and the Security and Safety Corporation of the Philippines
and 21 of the Civil Code would not suffice to keep the case within the (SSCP) entered into a Security Services Agreement[3] (Agreement) whereby
jurisdictional boundaries of regular Courts. That claim for damages is SSCP would provide armed security guards to PLDT to be assigned to its
interwoven with a labor dispute existing between the parties and would have to various offices.
be ventilated before the administrative machinery established for the expeditious
settlement of those disputes. To allow the action filed below to prosper would Pursuant to such agreement, petitioners Raul Locsin and Eddie Tomaquin,
bring about "split jurisdiction" which is obnoxious to the orderly administration among other security guards, were posted at a PLDT office.
of justice (Philippine Communications, Electronics and Electricity Workers On August 30, 2001, respondent issued a Letter dated August 30,
Federation vs. Hon. Nolasco, L-24984, 29 July 1968, 24 SCRA 321). 2001 terminating the Agreement effective October 1, 2001.[4]
We recognize the proprietary right of SanMig to exercise an inherent Despite the termination of the Agreement, however, petitioners continued to
management prerogative and its best business judgment to determine whether it secure the premises of their assigned office. They were allegedly directed to
should contract out the performance of some of its work to independent remain at their post by representatives of respondent. In support of their
contractors. However, the rights of all workers to self-organization, collective contention, petitioners provided the Labor Arbiter with copies of petitioner
bargaining and negotiations, and peaceful concerted activities, including the Locsins pay slips for the period of January to September 2002.[5]
BAUTISTA, Coleen Joyce Q. Page 7 of 58
Then, on September 30, 2002, petitioners services were terminated. WHEREFORE, the instant Petition for Certiorari is GRANTED. The
Resolutions dated October 28, 2005 and August 28, 2006 of the National Labor
Thus, petitioners filed a complaint before the Labor Arbiter for illegal dismissal Relations Commission are ANNULLED and SET ASIDE. Private respondents
and recovery of money claims such as overtime pay, holiday pay, premium pay complaint against Philippine Long Distance Telephone Company is
for holiday and rest day, service incentive leave pay, Emergency Cost of Living DISMISSED.
Allowance, and moral and exemplary damages against PLDT.
SO ORDERED.
The Labor Arbiter rendered a Decision finding PLDT liable for illegal dismissal.
It was explained in the Decision that petitioners were found to be employees of The CA applied the four-fold test in order to determine the existence of an
PLDT and not of SSCP. Such conclusion was arrived at with the factual finding employer-employee relationship between the parties but did not find such
that petitioners continued to serve as guards of PLDTs offices. As such relationship. It determined that SSCP was not a labor-only contractor and was an
employees, petitioners were entitled to substantive and procedural due process independent contractor having substantial capital to operate and conduct its own
before termination of employment. The Labor Arbiter held that respondent failed business. The CA further bolstered its decision by citing the Agreement whereby
to observe such due process requirements. The dispositive portion of the Labor it was stipulated that there shall be no employer-employee relationship between
Arbiters Decision reads: the security guards and PLDT.
WHEREFORE, premises considered, judgment is hereby rendered ordering Anent the pay slips that were presented by petitioners, the CA noted that those
respondent Philippine Long Distance and Telephone Company (PLDT) to pay were issued by SSCP and not PLDT; hence, SSCP continued to pay the salaries
complainants Raul E. Locsin and Eddie Tomaquin their separation pay and back of petitioners after the Agreement. This fact allegedly proved that petitioners
wages computed as follows: continued to be employees of SSCP albeit performing their work at PLDTs
premises.
NAME SEPARATION PAY BACKWAGES
From such assailed decision, petitioners filed a motion for reconsideration which
1. Raul E. Locsin P127,500.00 P240,954.67 was denied in the assailed resolution.
2. Eddie B. Tomaquin P127,500.00 P240,954.67 Hence, we have this petition.
P736,909.34 The Issues
All other claims are DISMISSED for want of factual basis. 1. Whether or not; complainants extended services to the respondent for one
(1) year from October 1, 2001, the effectivity of the termination of the contract
Let the computation made by the Computation and Examination Unit form part
of complainants agency SSCP, up to September 30, 2002, without a renewed
of this decision.
contract, constitutes an employer-employee relationship between respondent and
SO ORDERED. the complainants.

PLDT appealed the above Decision to the NLRC which rendered a Resolution 2. Whether or not; in accordance to the provision of the Article 280 of the
affirming in toto the Arbiters Decision. Labor Code, complainants extended services to the respondent for another one
(1) year without a contract be considered as contractual employment.
Thus, PDLT filed a Motion for Reconsideration of the NLRCs Resolution which
was also denied. 3. Whether or not; in accordance to the provision of the Article 280 of the
Labor Code, does complainants thirteen (13) years of service to the respondent
Consequently, PLDT filed a Petition for Certiorari with the CA asking for the with manifestation to the respondent thirteen (13) years renewal of its security
nullification of the Resolution issued by the NLRC as well as the Labor Arbiters contract with the complainant agency SSCP, can be considered only as seasonal
Decision. The CA rendered the assailed decision granting PLDTs petition and in nature or fixed as [specific projects] or undertakings and its completion or
dismissing petitioners complaint. The dispositive portion of the CA Decision termination can be dictated as [controlled] by the respondent anytime they
provides: wanted to.

BAUTISTA, Coleen Joyce Q. Page 8 of 58


4. Whether or not; complainants from being an alleged contractual employees Further, in determining that no employer-employee relationship existed between
of the respondent for thirteen (13) years as they were then covered by a contract, the parties, the CA quoted the express provision of the Agreement, stating that
becomes regular employees of the respondent as the one (1) year extended no employer-employee relationship existed between the parties herein. The CA
services of the complainants were not covered by a contract, and can be disregarded the pay slips of Locsin considering that they were in fact issued by
considered as direct employment pursuant to the provision of the Article 280 of SSCP and not by PLDT.
the Labor Code.
From the foregoing explanation of the CA, the fact remains that petitioners
5. Whether or not; the Court of Appeals committed grave abuse of discretion remained at their post after the termination of the Agreement. Notably, in its
when it set aside and [annulled] the labor [arbiters] decision and of the NLRCs Comment dated March 10, 2009,[8] respondent never denied that petitioners
resolution declaring the dismissal of the complainant as illegal.[6] remained at their post until September 30, 2002. While respondent denies the
alleged circumstances stated by petitioners, that they were told to remain at their
The Courts Ruling post by respondents Security Department and that they were informed by SSCP
Operations Officer Eduardo Juliano that their salaries would be coursed through
This petition is hereby granted.
SSCP as per arrangement with PLDT, it does not state why they were not made
An Employer-Employee to vacate their posts. Respondent said that it did not know why petitioners
remained at their posts.
Relationship Existed Between the Parties
Rule 131, Section 3(y) of the Rules of Court provides:
It is beyond cavil that there was no employer-employee relationship between the
parties from the time of petitioners first assignment to respondent by SSCP in SEC. 3. Disputable presumptions.The following presumptions are satisfactory if
1988 until the alleged termination of the Agreement between respondent and uncontradicted, but may be contradicted and overcome by other evidence:
SSCP. In fact, this was the conclusion that was reached by this Court in Abella v.
xxxx
Philippine Long Distance Telephone Company,[7] where we ruled that petitioners
therein, including herein petitioners, cannot be considered as employees of (y) That things have happened according to the ordinary course of nature and the
PLDT. It bears pointing out that petitioners were among those declared to be ordinary habits of life.
employees of their respective security agencies and not of PLDT.
In the ordinary course of things, responsible business owners or managers would
The only issue in this case is whether petitioners became employees of not allow security guards of an agency with whom the owners or managers have
respondent after the Agreement between SSCP and respondent was terminated. severed ties with to continue to stay within the business premises. This is
because upon the termination of the owners or managers agreement with the
This must be answered in the affirmative.
security agency, the agencys undertaking of liability for any damage that the
Notably, respondent does not deny the fact that petitioners remained in the security guard would cause has already been terminated. Thus, in the event of an
premises of their offices even after the Agreement was terminated. And it is this accident or otherwise damage caused by such security guards, it would be the
fact that must be explained. business owners and/or managers who would be liable and not the agency. The
business owners or managers would, therefore, be opening themselves up to
To recapitulate, the CA, in rendering a decision in favor of respondent, found liability for acts of security guards over whom the owners or managers allegedly
that: (1) petitioners failed to prove that SSCP was a labor-only contractor; and have no control.
(2) petitioners are employees of SSCP and not of PLDT.
At the very least, responsible business owners or managers would inquire or
In arriving at such conclusions, the CA relied on the provisions of the learn why such security guards were remaining at their posts, and would have a
Agreement, wherein SSCP undertook to supply PLDT with the required security clear understanding of the circumstances of the guards stay. It is but logical that
guards, while furnishing PLDT with a performance bond in the amount of PhP responsible business owners or managers would be aware of the situation in their
707,000. Moreover, the CA gave weight to the provision in the Agreement that premises.
SSCP warranted that it carry on an independent business and has substantial
capital or investment in the form of equipment, work premises, and other We point out that with respondents hypothesis, it would seem that SSCP was
materials which are necessary in the conduct of its business. paying petitioners salaries while securing respondents premises despite the

BAUTISTA, Coleen Joyce Q. Page 9 of 58


termination of their Agreement. Obviously, it would only be respondent that Jurisprudence is firmly settled that whenever the existence of an employment
would benefit from such a situation. And it is seriously doubtful that a security relationship is in dispute, four elements constitute the reliable yardstick: (a) the
agency that was established for profit would allow its security guards to secure selection and engagement of the employee; (b) the payment of wages; (c) the
respondents premises when the Agreement was already terminated. power of dismissal; and (d) the employers power to control the employees
conduct. It is the so-called control test which constitutes the most important
From the foregoing circumstances, reason dictates that we conclude that index of the existence of the employer-employee relationship that is, whether the
petitioners remained at their post under the instructions of respondent. We can employer controls or has reserved the right to control the employee not only as
further conclude that respondent dictated upon petitioners that the latter perform to the result of the work to be done but also as to the means and methods by
their regular duties to secure the premises during operating hours. This, to our which the same is to be accomplished. Stated otherwise, an employer-employee
mind and under the circumstances, is sufficient to establish the existence of an relationship exists where the person for whom the services are performed
employer-employee relationship. Certainly, the facts as narrated by petitioners reserves the right to control not only the end to be achieved but also the means to
are more believable than the irrational denials made by respondent. Thus, we be used in reaching such end.
ruled in Lee Eng Hong v. Court of Appeals:[9]
Furthermore, Article 106 of the Labor Code contains a provision on contractors,
Evidence, to be believed, must not only proceed from the mouth of a credible to wit:
witness, but it must be credible in itself such as the common experience and
observation of mankind can approve as probable under the circumstances. We Art. 106. Contractor or subcontractor. Whenever an employer enters into a
have no test of the truth of human testimony, except its conformity to our contract with another person for the performance of the formers work, the
knowledge, observation and experience. Whatever is repugnant to these belongs employees of the contractor and of the latters subcontractor, if any, shall be paid
to the miraculous and is outside judicial cognizance (Castaares v. Court of in accordance with the provisions of this Code.
Appeals, 92 SCRA 568 [1979]).
In the event that the contractor or subcontractor fails to pay the wages of his
To reiterate, while respondent and SSCP no longer had any legal relationship employees in accordance with this Code, the employer shall be jointly and
with the termination of the Agreement, petitioners remained at their post severally liable with his contractor or subcontractor to such employees to the
securing the premises of respondent while receiving their salaries, allegedly extent of the work performed under the contract, in the same manner and extent
from SSCP. Clearly, such a situation makes no sense, and the denials proffered that he is liable to employees directly employed by him.
by respondent do not shed any light to the situation. It is but reasonable to
conclude that, with the behest and, presumably, directive of respondent, The Secretary of Labor and Employment may, by appropriate regulations,
petitioners continued with their services. Evidently, such are indicia of control restrict or prohibit the contracting-out of labor to protect the rights of
that respondent exercised over petitioners. workers established under this Code. In so prohibiting or restricting, he
may make appropriate distinctions between labor-only contracting and job
Such power of control has been explained as the right to control not only the end contracting as well as differentiations within these types of contracting and
to be achieved but also the means to be used in reaching such end.[10] With the determine who among the parties involved shall be considered the employer
conclusion that respondent directed petitioners to remain at their posts and for purposes of this Code, to prevent any violation or circumvention of any
continue with their duties, it is clear that respondent exercised the power of provision of this Code.
control over them; thus, the existence of an employer-employee relationship.
There is labor-only contracting where the person supplying workers to an
In Tongko v. The Manufacturers Life Insurance Co. (Phils.) Inc.,[11] we reiterated employer does not have substantial capital or investment in the form of tools,
the oft repeated rule that control is the most important element in the equipment, machineries, work premises, among others, and the workers
determination of the existence of an employer-employee relationship: recruited and placed by such person are performing activities which are directly
related to the principal business of such employer. In such cases, the person or
In the determination of whether an employer-employee relationship exists intermediary shall be considered merely as an agent of the employer who shall
between two parties, this Court applies the four-fold test to determine the be responsible to the workers in the same manner and extent as if the latter were
existence of the elements of such relationship. In Pacific Consultants directly employed by him. (Emphasis supplied.)
International Asia, Inc. v. Schonfeld, the Court set out the elements of an
employer-employee relationship, thus: Thus, the Secretary of Labor issued Department Order No. 18-2002, Series of
2002, implementing Art. 106 as follows:
BAUTISTA, Coleen Joyce Q. Page 10 of 58
Section 5. Prohibition against labor-only contracting.Labor-only contracting is onwardsas this was the only time that any evidence of control was exhibited by
hereby declared prohibited. For this purpose, labor-only contracting shall refer to respondent over petitioners and in light of our ruling in Abella.[12] Thus, as aptly
an arrangement where the contractor or subcontractor merely recruits, supplies declared by the NLRC, petitioners were entitled to the rights and benefits of
or places workers to perform a job, work or service for a principal, and any of employees of respondent, including due process requirements in the termination
the following elements are present: of their services.
(i) The contractor or subcontractor does not have substantial capital or Both the Labor Arbiter and NLRC found that respondent did not observe such
investment which relates to the job, work or service to be performed and the due process requirements. Having failed to do so, respondent is guilty of illegal
employees recruited, supplied or placed by such contractor or subcontractor are dismissal.
performing activities which are directly related to the main business of the
principal; or WHEREFORE, we SET ASIDE the CAs May 6, 2008 Decision and November
4, 2008 Resolution in CA-G.R. SP No. 97398. We hereby REINSTATE the
(ii) the contractor does not exercise the right to control over the Labor Arbiters Decision dated February 13, 2004 and the NLRCs Resolutions
performance of the work of the contractual employee. dated October 28, 2005 and August 28, 2006.
The foregoing provisions shall be without prejudice to the application of Article No costs.
248 (C) of the Labor Code, as amended.
Substantial capital or investment refers to capital stocks and subscribed
capitalization in the case of corporations, tools, equipment, implements, People’s Broadcasting Service vs Sec of Labor
machineries and work premises, actually and directly used by the contractor or In a Petition for Certiorari under Rule 65, petitioner Peoples Broadcasting
subcontractor in the performance or completion of the job, work or service Service, Inc. (Bombo Radyo Phils., Inc.) questioned the Decision and Resolution
contracted out. of the Court of Appeals (CA) dated October 26, 2006 and June 26, 2007,
The right to control shall refer to the right reserved to the person for whom the respectively, in C.A. G.R. CEB-SP No. 00855.
services of the contractual workers are performed, to determine not only the end Private respondent Jandeleon Juezan filed a complaint against petitioner with the
to be achieved, but also the manner and means to be used in reaching that end. Department of Labor and Employment (DOLE) Regional Office No. VII, Cebu
On the other hand, Sec. 7 of the department order contains the consequence of City, for illegal deduction, nonpayment of service incentive leave, 13th month
such labor-only contracting: pay, premium pay for holiday and rest day and illegal diminution of benefits,
delayed payment of wages and noncoverage of SSS, PAG-IBIG and Philhealth.
Section 7. Existence of an employer-employee relationship.The contractor or [1] After the conduct of summary investigations, and after the parties submitted
subcontractor shall be considered the employer of the contractual employee for their position papers, the DOLE Regional Director found that private respondent
purposes of enforcing the provisions of the Labor Code and other social was an employee of petitioner, and was entitled to his money claims.[2] Petitioner
legislation. The principal, however, shall be solidarily liable with the contractor sought reconsideration of the Directors Order, but failed. The Acting DOLE
in the event of any violation of any provision of the Labor Code, including the Secretary dismissed petitioners appeal on the ground that petitioner submitted a
failure to pay wages. Deed of Assignment of Bank Deposit instead of posting a cash or surety
bond. When the matter was brought before the CA, where petitioner claimed that
The principal shall be deemed the employer of the contractual employee in any it had been denied due process, it was held that petitioner was accorded due
of the following cases as declared by a competent authority: process as it had been given the opportunity to be heard, and that the DOLE
Secretary had jurisdiction over the matter, as the jurisdictional limitation
(a) where there is labor-only contracting; or
imposed by Article 129 of the Labor Code on the power of the DOLE Secretary
(b) where the contracting arrangement falls within the prohibitions provided in under Art. 128(b) of the Code had been repealed by Republic Act No. (RA)
Section 6 (Prohibitions) hereof. (Emphasis supplied.) 7730.[3]

Evidently, respondent having the power of control over petitioners must be


considered as petitioners employerfrom the termination of the Agreement

BAUTISTA, Coleen Joyce Q. Page 11 of 58


In the Decision of this Court, the CA Decision was reversed and set aside, and It is conceded that if there is no employer-employee relationship, whether it has
the complaint against petitioner was dismissed. The dispositive portion of the been terminated or it has not existed from the start, the DOLE has no
Decision reads as follows: jurisdiction. Under Art. 128(b) of the Labor Code, as amended by RA 7730, the
first sentence reads, Notwithstanding the provisions of Articles 129 and 217 of
WHEREFORE, the petition is GRANTED. The Decision dated 26 October this Code to the contrary, and in cases where the relationship of employer-
2006 and the Resolution dated 26 June 2007 of the Court of Appeals in C.A. employee still exists, the Secretary of Labor and Employment or his duly
G.R. CEB-SP No. 00855 are REVERSED and SET ASIDE. The Order of the authorized representatives shall have the power to issue compliance orders to
then Acting Secretary of the Department of Labor and Employment dated 27 give effect to the labor standards provisions of this Code and other labor
January 2005 denying petitioners appeal, and the Orders of the Director, DOLE legislation based on the findings of labor employment and enforcement officers
Regional Office No. VII, dated 24 May 2004 and 27 February 2004, or industrial safety engineers made in the course of inspection. It is clear and
respectively, are ANNULLED. The complaint against petitioner beyond debate that an employer-employee relationship must exist for the
is DISMISSED.[4] exercise of the visitorial and enforcement power of the DOLE. The question now
arises, may the DOLE make a determination of whether or not an employer-
The Court found that there was no employer-employee relationship between
employee relationship exists, and if so, to what extent?
petitioner and private respondent. It was held that while the DOLE may make a
determination of the existence of an employer-employee relationship, this The first portion of the question must be answered in the affirmative.
function could not be co-extensive with the visitorial and enforcement power
provided in Art. 128(b) of the Labor Code, as amended by RA 7730. The The prior decision of this Court in the present case accepts such answer, but
National Labor Relations Commission (NLRC) was held to be the primary places a limitation upon the power of the DOLE, that is, the determination of the
agency in determining the existence of an employer-employee relationship. This existence of an employer-employee relationship cannot be co-extensive with the
was the interpretation of the Court of the clause in cases where the relationship visitorial and enforcement power of the DOLE. But even in conceding the power
of employer-employee still exists in Art. 128(b).[5] of the DOLE to determine the existence of an employer-employee relationship,
the Court held that the determination of the existence of an employer-employee
From this Decision, the Public Attorneys Office (PAO) filed a Motion for relationship is still primarily within the power of the NLRC, that any finding by
Clarification of Decision (with Leave of Court). The PAO sought to clarify as to the DOLE is merely preliminary.
when the visitorial and enforcement power of the DOLE be not considered as
co-extensive with the power to determine the existence of an employer- This conclusion must be revisited.
employee relationship.[6] In its Comment,[7] the DOLE sought clarification as
well, as to the extent of its visitorial and enforcement power under the Labor No limitation in the law was placed upon the power of the DOLE to determine
Code, as amended. the existence of an employer-employee relationship. No procedure was laid
down where the DOLE would only make a preliminary finding, that the power
The Court treated the Motion for Clarification as a second motion for was primarily held by the NLRC. The law did not say that the DOLE would first
reconsideration, granting said motion and reinstating the petition.[8] It is apparent seek the NLRCs determination of the existence of an employer-employee
that there is a need to delineate the jurisdiction of the DOLE Secretary vis--vis relationship, or that should the existence of the employer-employee relationship
that of the NLRC. be disputed, the DOLE would refer the matter to the NLRC. The DOLE must
have the power to determine whether or not an employer-employee relationship
Under Art. 129 of the Labor Code, the power of the DOLE and its duly exists, and from there to decide whether or not to issue compliance orders in
authorized hearing officers to hear and decide any matter involving the recovery accordance with Art. 128(b) of the Labor Code, as amended by RA 7730.
of wages and other monetary claims and benefits was qualified by the proviso
that the complaint not include a claim for reinstatement, or that the aggregate The DOLE, in determining the existence of an employer-employee relationship,
money claims not exceed PhP 5,000. RA 7730, or an Act Further Strengthening has a ready set of guidelines to follow, the same guide the courts themselves
the Visitorial and Enforcement Powers of the Secretary of Labor, did away with use. The elements to determine the existence of an employment relationship are:
the PhP 5,000 limitation, allowing the DOLE Secretary to exercise its visitorial (1) the selection and engagement of the employee; (2) the payment of wages; (3)
and enforcement power for claims beyond PhP 5,000. The only qualification to the power of dismissal; (4) the employers power to control the employees
this expanded power of the DOLE was only that there still be an existing conduct.[9] The use of this test is not solely limited to the NLRC. The DOLE
employer-employee relationship. Secretary, or his or her representatives, can utilize the same test, even in the

BAUTISTA, Coleen Joyce Q. Page 12 of 58


course of inspection, making use of the same evidence that would have been the jurisdiction is with the regional director of the DOLE, under Art. 129, and if
presented before the NLRC. the amount involved exceeds PhP 5,000, the jurisdiction is with the labor arbiter,
under Art. 217. The view states that despite the wording of Art. 128(b), this
The determination of the existence of an employer-employee relationship by the would only apply in the course of regular inspections undertaken by the DOLE,
DOLE must be respected. The expanded visitorial and enforcement power of the as differentiated from cases under Arts. 129 and 217, which originate from
DOLE granted by RA 7730 would be rendered nugatory if the alleged employer complaints. There are several cases, however, where the Court has ruled that Art.
could, by the simple expedient of disputing the employer-employee relationship, 128(b) has been amended to expand the powers of the DOLE Secretary and his
force the referral of the matter to the NLRC. The Court issued the declaration duly authorized representatives by RA 7730. In these cases, the Court resolved
that at least a prima facie showing of the absence of an employer-employee that the DOLE had the jurisdiction, despite the amount of the money claims
relationship be made to oust the DOLE of jurisdiction. But it is precisely the involved. Furthermore, in these cases, the inspection held by the DOLE regional
DOLE that will be faced with that evidence, and it is the DOLE that will weigh director was prompted specifically by a complaint. Therefore, the initiation of a
it, to see if the same does successfully refute the existence of an employer- case through a complaint does not divest the DOLE Secretary or his duly
employee relationship. authorized representative of jurisdiction under Art. 128(b).
If the DOLE makes a finding that there is an existing employer-employee To recapitulate, if a complaint is brought before the DOLE to give effect to the
relationship, it takes cognizance of the matter, to the exclusion of the NLRC. The labor standards provisions of the Labor Code or other labor legislation, and there
DOLE would have no jurisdiction only if the employer-employee relationship is a finding by the DOLE that there is an existing employer-employee
has already been terminated, or it appears, upon review, that no employer- relationship, the DOLE exercises jurisdiction to the exclusion of the NLRC. If
employee relationship existed in the first place. the DOLE finds that there is no employer-employee relationship, the jurisdiction
is properly with the NLRC. If a complaint is filed with the DOLE, and it is
The Court, in limiting the power of the DOLE, gave the rationale that such
accompanied by a claim for reinstatement, the jurisdiction is properly with the
limitation would eliminate the prospect of competing conclusions between the
Labor Arbiter, under Art. 217(3) of the Labor Code, which provides that the
DOLE and the NLRC. The prospect of competing conclusions could just as well
Labor Arbiter has original and exclusive jurisdiction over those cases involving
have been eliminated by according respect to the DOLE findings, to the
wages, rates of pay, hours of work, and other terms and conditions of
exclusion of the NLRC, and this We believe is the more prudent course of action
employment, if accompanied by a claim for reinstatement. If a complaint is filed
to take.
with the NLRC, and there is still an existing employer-employee relationship,
This is not to say that the determination by the DOLE is beyond question or the jurisdiction is properly with the DOLE. The findings of the DOLE, however,
review. Suffice it to say, there are judicial remedies such as a petition for may still be questioned through a petition for certiorari under Rule 65 of the
certiorari under Rule 65 that may be availed of, should a party wish to dispute Rules of Court
the findings of the DOLE.
In the present case, the finding of the DOLE Regional Director that there was an
It must also be remembered that the power of the DOLE to determine the employer-employee relationship has been subjected to review by this Court, with
existence of an employer-employee relationship need not necessarily result in an the finding being that there was no employer-employee relationship between
affirmative finding. The DOLE may well make the determination that no petitioner and private respondent, based on the evidence presented. Private
employer-employee relationship exists, thus divesting itself of jurisdiction over respondent presented self-serving allegations as well as self-defeating evidence.
[10] The findings of the Regional Director were not based on substantial
the case. It must not be precluded from being able to reach its own conclusions,
not by the parties, and certainly not by this Court. evidence, and private respondent failed to prove the existence of an employer-
employee relationship. The DOLE had no jurisdiction over the case, as there was
Under Art. 128(b) of the Labor Code, as amended by RA 7730, the DOLE is no employer-employee relationship present. Thus, the dismissal of the complaint
fully empowered to make a determination as to the existence of an employer- against petitioner is proper.
employee relationship in the exercise of its visitorial and enforcement power,
subject to judicial review, not review by the NLRC. WHEREFORE, the Decision of this Court in G.R. No. 179652 is
hereby AFFIRMED, with the MODIFICATION that in the exercise of the
There is a view that despite Art. 128(b) of the Labor Code, as amended by RA DOLEs visitorial and enforcement power, the Labor Secretary or the latters
7730, there is still a threshold amount set by Arts. 129 and 217 of the Labor authorized representative shall have the power to determine the existence of an
Code when money claims are involved, i.e., that if it is for PhP 5,000 and below,
BAUTISTA, Coleen Joyce Q. Page 13 of 58
employer-employee relationship, to the exclusion of the NLRC. SO TO : ALL CONCERNED
ORDERED.
FROM : DANTE LUZON
DATE : MARCH 25, 1998
Ymbong vs. ABSCBN
SUBJECT : AS STATED
Before us is a Rule 45 Petition seeking to set aside the August 22, 2007
Decision[1] and September 18, 2008 Resolution[2] of the Court of Appeals (CA) Please be informed that per company policy, any employee/talent who wants to
in CA-G.R. SP No. 86206 declaring petitioner to have resigned from work and run for any position in the coming election will have to file a leave of
not illegally dismissed. absence the moment he/she files his/her certificate of candidacy.

The antecedent facts follow: The services rendered by the concerned employee/talent to this company will
then be temporarily suspended for the entire campaign/election period.
Petitioner Ernesto G. Ymbong started working for ABS-CBN Broadcasting
Corporation (ABS-CBN) in 1993 at its regional station in Cebu as a television For strict compliance.[4] [Emphasis and underscoring supplied.]
talent, co-anchoringHoy Gising and TV Patrol Cebu. His stint in ABS-CBN later Luzon, however, admitted that upon double-checking of the exact text of the
extended to radio when ABS-CBN Cebu launched its AM station DYAB in 1995 policy and subsequent confirmation with the ABS-CBN Head Office, he saw that
where he worked as drama and voice talent, spinner, scriptwriter and public the policy actually required suspension for those who intend to campaign for a
affairs program anchor. political party or candidate and resignation for those who will actually run in the
Like Ymbong, Leandro Patalinghug also worked for ABS-CBN Cebu. Starting elections.[5]
1995, he worked as talent, director and scriptwriter for various radio programs After the issuance of the March 25, 1998 Memorandum, Ymbong got in touch
aired over DYAB. with Luzon. Luzon claims that Ymbong approached him and told him that he
On January 1, 1996, the ABS-CBN Head Office in Manila issued Policy No. would leave radio for a couple of months because he will campaign for the
HR-ER-016 or the Policy on Employees Seeking Public Office. The pertinent administration ticket. It was only after the elections that they found out that
portions read: Ymbong actually ran for public office himself at the eleventh hour. Ymbong, on
the other hand, claims that in accordance with the March 25, 1998
1. Any employee who intends to run for any public office position, must Memorandum, he informed Luzon through a letter that he would take a few
file his/her letter of resignation, at least thirty (30) days prior to the official months leave of absence from March 8, 1998 to May 18, 1998 since he was
filing of the certificate of candidacy either for national or local election. running for councilor of Lapu-Lapu City.
xxxx As regards Patalinghug, Patalinghug approached Luzon and advised him that he
will run as councilor for Naga, Cebu. According to Luzon, he clarified to
3. Further, any employee who intends to join a political group/party or even Patalinghug that he will be considered resigned and not just on leave once he
with no political affiliation but who intends to openly and aggressively files a certificate of candidacy. Thus, Patalinghug wrote Luzon the following
campaign for a candidate or group of candidates (e.g. publicly speaking/ letter on April 13, 1998:
endorsing candidate, recruiting campaign workers, etc.) must file a request for
leave of absence subject to managements approval. For this particular reason, Dear Mr. Luzon,
the employee should file the leave request at least thirty (30) days prior to the
start of the planned leave period. Im submitting to you my letter of resignation as your Drama Production Chief
and Talent due to your companys policy that every person connected to ABS-
x x x x[3] [Emphasis and underscoring supplied.] CBN that should seek an elected position in the government will be forced to
resigned (sic) from his position. So herewith Im submitting my resignation with
Because of the impending May 1998 elections and based on his immediate a hard heart. But Im still hoping to be connected again with your prestigious
recollection of the policy at that time, Dante Luzon, Assistant Station Manager company after the election[s] should you feel that Im still an asset to your drama
of DYAB issued the following memorandum: production department. Im looking forward to that day and Im very happy and

BAUTISTA, Coleen Joyce Q. Page 14 of 58


proud that I have served for two and a half years the most stable and the most services are being terminated immediately, much to his surprise. Thus, he filed
prestigious Radio and TV Network in the Philippines. an illegal dismissal complaint[8]against ABS-CBN, Luzon and DYAB Station
Manager Veneranda Sy. He argued that the ground cited by ABS-CBN for his
As a friend[,] wish me luck and Pray for me. Thank you. dismissal was not among those enumerated in the Labor Code, as amended. And
even granting without admitting the existence of the company policy supposed
to have been violated, Ymbong averred that it was necessary that the company
Very Truly Yours, policy meet certain requirements before willful disobedience of the policy may
constitute a just cause for termination. Ymbong further argued that the company
(Sgd.) policy violates his constitutional right to suffrage.[9]
Leandro Boy Patalinghug[6] Patalinghug likewise filed an illegal dismissal complaint[10] against ABS-CBN.
Unfortunately, both Ymbong and Patalinghug lost in the May 1998 elections. ABS-CBN prayed for the dismissal of the complaints arguing that there is no
employer-employee relationship between the company and Ymbong and
Later, Ymbong and Patalinghug both tried to come back to ABS-CBN Cebu. Patalinghug. ABS-CBN contended that they are not employees but talents as
According to Luzon, he informed them that they cannot work there anymore evidenced by their talent contracts. However, notwithstanding their status, ABS-
because of company policy. This was stressed even in subsequent meetings and CBN has a standing policy on persons connected with the company whenever
they were told that the company was not allowing any exceptions. ABS-CBN, they will run for public office.[11]
however, agreed out of pure liberality to give them a chance to wind up their
participation in the radio drama, Nagbabagang Langit, since it was rating well On July 14, 1999, the Labor Arbiter rendered a decision[12] finding the dismissal
and to avoid an abrupt ending. The agreed winding-up, however, dragged on for of Ymbong and Patalinghug illegal, thus:
so long prompting Luzon to issue to Ymbong the following memorandum
dated September 14, 1998: WHEREFORE, in the light of the foregoing, judgment is rendered finding the
dismissal of the two complainants illegal. An order is issued directing
TO : NESTOR YMBONG respondent ABS[-]CBN to immediately reinstate complainants to their former
positions without loss of seniority rights plus the payment of backwages in the
FROM : DANTE LUZON amount of P200,000.00 to each complainant.
SUBJECT : AS STATED All other claims are dismissed.
DATE : 14 SEPT. 1998 SO ORDERED.[13]
Please be reminded that your services as drama talent had already been The Labor Arbiter found that there exists an employer-employee relationship
automatically terminated when you ran for a local government position last between ABS-CBN and Ymbong and Patalinghug considering the stipulations in
election. their appointment letters/talent contracts. The Labor Arbiter noted particularly
The Management however gave you more than enough time to end your drama that the appointment letters/talent contracts imposed conditions in the
participation and other involvement with the drama department. performance of their work, specifically on attendance and punctuality, which
effectively placed them under the control of ABS-CBN. The Labor Arbiter
It has been decided therefore that all your drama participation shall be likewise ruled that although the subject company policy is reasonable and not
terminated effective immediately. However, your involvement as drama spinner/ contrary to law, the same was not made known to Ymbong and Patalinghug and
narrator of the drama NAGBA[BA]GANG LANGIT continues until its writer/ in fact was superseded by another one embodied in the March 25, 1998
director Mr. Leandro Patalinghug wraps it up one week upon receipt of a Memorandum issued by Luzon. Thus, there is no valid or authorized cause in
separate memo issued to him.[7] terminating Ymbong and Patalinghug from their employment.

Ymbong in contrast contended that after the expiration of his leave of absence, In its memorandum of appeal[14] before the National Labor Relations
he reported back to work as a regular talent and in fact continued to receive his Commission (NLRC), ABS-CBN contended that the Labor Arbiter has no
salary. On September 14, 1998, he received a memorandum stating that his jurisdiction over the case because there is no employer-employee relationship

BAUTISTA, Coleen Joyce Q. Page 15 of 58


between the company and Ymbong and Patalinghug, and that Sy and Luzon letter. The NLRC noted that although the tenor of the resignation letter is
mistakenly assumed that Ymbong and Patalinghug could just file a leave of somewhat involuntary, he knew that it is the policy of the company that every
absence since they are only talents and not employees. In its Supplemental person connected therewith should resign from his employment if he seeks an
Appeal,[15] ABS-CBN insisted that Ymbong and Patalinghug were engaged as elected position in the government. As to Ymbong, however, the NLRC ruled
radio talents for DYAB dramas and personality programs and their contract is otherwise. It ruled that the March 25, 1998 Memorandum merely states that an
one between a self-employed contractor and the hiring party which is a standard employee who seeks any elected position in the government will only merit the
practice in the broadcasting industry. It also argued that the Labor Arbiter should temporary suspension of his services. It held that under the principle of social
not have made much of the provisions on Ymbongs attendance and punctuality justice, the March 25, 1998 Memorandum shall prevail and ABS-CBN is
since such requirement is a dictate of the programming of the station, the slating estopped from enforcing the September 14, 1998 memorandum issued to
of shows at regular time slots, and availability of recording studios not an Ymbong stating that his services had been automatically terminated when he ran
attempt to exercise control over the manner of his performance of the contracted for an elective position.
anchor work within his scheduled spot on air. As for the pronouncement that the
company policy has already been superseded by the March 25, ABS-CBN moved to reconsider the NLRC decision, but the same was denied in
1998 Memorandum issued by Luzon, the latter already clarified that it was the a Resolution dated June 21, 2004.[19]
very policy he sought to enforce. This matter was relayed by Luzon to Imputing grave abuse of discretion on the NLRC, ABS-CBN filed a petition for
Patalinghug when the latter disclosed his plans to join the 1998 elections while certiorari[20] before the CA alleging that:
Ymbong only informed the company that he was campaigning for the
administration ticket and the company had no inkling that he will actually run I.
until the issue was already moot and academic. ABS-CBN further contended that
Ymbong and Patalinghugs reinstatement is legally and physically impossible as RESPONDENT NLRC COMMITTED A GRAVE ABUSE OF DISCRETION
the talent positions they vacated no longer exist. Neither is there basis for the AND SERIOUSLY MISAPPRECIATED THE FACTS IN NOT HOLDING
award of back wages since they were not earning a monthly salary but paid THAT RESPONDENT YMBONG IS A FREELANCE RADIO TALENT AND
talent fees on a per production/per script basis. Attached to the Supplemental MEDIA PRACTITIONERNOT A REGULAR EMPLOYEE OF
Appeal is a Sworn Statement[16] of Luzon. PETITIONERTO WHOM CERTAIN PRODUCTION WORK HAD BEEN
OUTSOURCED BY ABS-CBN CEBU UNDER AN INDEPENDENT
On March 8, 2004, the NLRC rendered a decision[17] modifying the labor CONTRACTORSHIP SITUATION, THUS RENDERING THE LABOR
arbiters decision. The fallo of the NLRC decision reads: COURTS WITHOUT JURISDICTION OVER THE CASE IN THE ABSENCE
OF EMPLOYMENT RELATIONS BETWEEN THE PARTIES.
WHEREFORE, premises considered, the decision of Labor Arbiter Nicasio C.
Aninon dated 14 July 1999 is MODIFIED, to wit:
Ordering respondent ABS-CBN to reinstate complainant Ernesto G. Ymbong II.
and to pay his full backwages computed from 15 September 1998 up to the time
of his actual reinstatement. RESPONDENT NLRC COMMITTED A GRAVE ABUSE OF DISCRETION
IN DECLARING RESPONDENT YMBONG TO BE A REGULAR
SO ORDERED.[18] EMPLOYEE OF PETITIONER AS TO CREATE A CONTRACTUAL
EMPLOYMENT RELATION BETWEEN THEM WHEN NONE EXISTS OR
The NLRC dismissed ABS-CBNs Supplemental Appeal for being filed out of HAD BEEN AGREED UPON OR OTHERWISE INTENDED BY THE
time. The NLRC ruled that to entertain the same would be to allow the parties to PARTIES.
submit their appeal on piecemeal basis, which is contrary to the agencys duty to
facilitate speedy disposition of cases. The NLRC also held that ABS-CBN
wielded the power of control over Ymbong and Patalinghug, thereby proving the
existence of an employer-employee relationship between them. III.

As to the issue of whether they were illegally dismissed, the NLRC treated their EVEN ASSUMING THE ALLEGED EMPLOYMENT RELATION TO EXIST
cases differently. In the case of Patalinghug, it found that he voluntarily resigned FOR THE SAKE OF ARGUMENT, RESPONDENT NLRC IN ANY CASE
from employment on April 21, 1998 when he submitted his resignation COMMITTED A GRAVE ABUSE OF DISCRETION IN NOT SIMILARLY
BAUTISTA, Coleen Joyce Q. Page 16 of 58
UPHOLDING AND APPLYING COMPANY POLICY NO. HR-ER-016 noted that said policy is entitled Policy on Employees Seeking Public Office and
IN THE CASE OF RESPONDENT YMBONG AND DEEMING HIM AS the guidelines contained therein specifically pertain to employees and did not
RESIGNED AND DISQUALIFIED FROM FURTHER ENGAGEMENT AS A even mention talents or independent contractors. It held that it is a complete
RADIO TALENT IN ABS-CBN CEBU AS A CONSEQUENCE OF HIS turnaround on ABS-CBNs part to later argue that Ymbong is only a radio talent
CANDIDACY IN THE 1998 ELECTIONS, AS RESPONDENT NLRC HAD or independent contractor and not its employee. By applying the subject
DONE IN THE CASE OF PATALINGHUG. company policy on Ymbong, ABS-CBN had explicitly recognized him to be an
employee and not merely an independent contractor.
The CA likewise held that the subject company policy is the controlling
IV. guideline and therefore, Ymbong should be considered resigned from ABS-
CBN. While Luzon has policy-making power as assistant radio manager, he had
RESPONDENT NLRC COMMITTED A GRAVE ABUSE OF DISCRETION
no authority to issue a memorandum that had the effect of repealing or
AND DENIED DUE PROCESS TO PETITIONER IN REFUSING TO
superseding a subsisting policy. Contrary to the findings of the Labor Arbiter, the
CONSIDER ITS SUPPLEMENTAL APPEAL, DATED OCTOBER 18, 1999,
subject company policy was effective at that time and continues to be valid and
FOR BEING FILED OUT OF TIME CONSIDERING THAT THE FILING OF
subsisting up to the present. The CA cited Patalinghugs resignation letter to
SUCH A PLEADING IS NOT IN ANY CASE PROSCRIBED AND
buttress this conclusion, noting that Patalinghug openly admitted in his letter that
RESPONDENT NLRC IS AUTHORIZED TO CONSIDER ADDITIONAL
his resignation was in line with the said company policy. Since ABS-CBN
EVIDENCE ON APPEAL; MOREOVER, TECHNICAL RULES OF
applied Policy No. HR-ER-016 to Patalinghug, there is no reason not to apply
EVIDENCE DO NOT APPLY IN LABOR CASES.
the same regulation to Ymbong who was on a similar situation as the
former. Thus, the CA found that the NLRC overstepped its area of discretion to a
point of grave abuse in declaring Ymbong to have been illegally terminated. The
V. CA concluded that there is no illegal dismissal to speak of in the instant case as
Ymbong is considered resigned when he ran for an elective post pursuant to the
RESPONDENT NLRC COMMITTED A GRAVE ABUSE OF DISCRETION subject company policy.
IN GRANTING THE RELIEF OF REINSTATEMENT AND BACKWAGES
TO RESPONDENT YMBONG SINCE HE NEVER OCCUPIED ANY Hence, this petition.
REGULAR POSITION IN PETITIONER FROM WHICH HE COULD HAVE
BEEN ILLEGALLY DISMISSED, NOR ARE ANY OF THE RADIO Petitioner argues that the CA gravely erred: (1) in upholding Policy No. HR-
PRODUCTIONS IN WHICH HE HAD DONE TALENT WORK FOR ER-016; (2) in upholding the validity of the termination of Ymbongs services;
PETITIONER STILL EXISTING. INDEED, THERE IS NO BASIS and (3) when it reversed the decision of the NLRC 4th Division of Cebu City
WHATSOEVER FOR THE AWARD OF BACKWAGES TO RESPONDENT which affirmed the decision of Labor Arbiter Nicasio C. Anion.[22]
YMBONG IN THE AMOUNT OF P200,000.00 CONSIDERING THAT, AS
Ymbong argues that the subject company policy is a clear interference and a
SHOWN BY THE UNCONTROVERTED EVIDENCE, HE WAS NOT
gross violation of an employees right to suffrage. He is surprised why it was
EARNING A MONTHLY SALARY OF P20,000.00, AS HE FALSELY
easy for the CA to rule that Luzons memorandum ran counter to an existing
CLAIMS, BUT WAS PAID TALENT FEES ON A PER PRODUCTION/PER
policy while on the other end, it did not see that it was in conflict with the
SCRIPT BASIS WHICH AVERAGED LESS THAN P10,000.00 PER MONTH
constitutional right to suffrage. He also points out that the issuance of the March
IN TALENT FEES ALL IN ALL.[21]
25, 1998 Memorandum was precisely an exercise of the management power to
On August 22, 2007, the CA rendered the assailed decision reversing and setting which an employee like him must respect; otherwise, he will be sanctioned for
aside the March 8, 2004 Decision and June 21, 2004 Resolution of the disobedience or worse, even terminated. He was not in a position to know which
NLRC. The CA declared Ymbong resigned from employment and not to have between the two issuances was correct and as far as he is concerned, the March
been illegally dismissed. The award of full back wages in his favor was deleted 25, 1998 Memorandum superseded the subject company policy. Moreover, ABS-
accordingly. CBN cannot disown acts of its officers most especially since it prejudiced his
property rights.[23]
The CA ruled that ABS-CBN is estopped from claiming that Ymbong was not its
employee after applying the provisions of Policy No. HR-ER-016 to him. It

BAUTISTA, Coleen Joyce Q. Page 17 of 58


As to the validity of his dismissal, Ymbong contends that the ground relied upon apprised Luzon through a letter of his intention to run for public office, but he
by ABS-CBN is not among the just and authorized causes provided in the Labor failed to adduce a copy of the same.[30]
Code, as amended. And even assuming the subject company policy passes the
test of validity under the pretext of the right of the management to discipline and As to Ymbongs argument that the CA should not have reversed the findings of
terminate its employees, the exercise of such right is not without the Labor Arbiter and the NLRC, ABS-CBN asseverates that the CA is not
bounds. Ymbong avers that his automatic termination was a blatant disregard of precluded from making its own findings most especially if upon its own review
his right to due process. He was never asked to explain why he did not tender his of the case, it has been revealed that the NLRC, in affirming the findings of the
resignation before he ran for public office as mandated by the subject company Labor Arbiter, committed grave abuse of discretion amounting to lack or excess
policy.[24] of jurisdiction when it failed to apply the subject company policy in Ymbongs
case when it readily applied the same to Patalinghug.[31]
Ymbong likewise asseverates that both the Labor Arbiter and the NLRC were
consistent in their findings that he was illegally dismissed. It is settled that Essentially, the issues to be resolved in the instant petition are: (1) whether
factual findings of labor administrative officials, if supported by substantial Policy No. HR-ER-016 is valid; (2) whether the March 25, 1998 Memorandum
evidence, are accorded not only great respect but even finality.[25] issued by Luzonsuperseded Policy No. HR-ER-016; and (3) whether Ymbong,
by seeking an elective post, is deemed to have resigned and not dismissed by
ABS-CBN, for its part, counters that the validity of policies such as Policy No. ABS-CBN.
HR-ER-016 has long been upheld by this Court which has ruled that a media
company has a right to impose a policy providing that employees who file their Policy No. HR-ER-016 is valid.
certificates of candidacy in any election shall be considered resigned.
[26] Moreover, case law has upheld the validity of the exercise of management
This is not the first time that this Court has dealt with a policy similar to Policy
No. HR-ER-016. In the case of Manila Broadcasting Company v. NLRC,[32] this
prerogatives even if they appear to limit the rights of employees as long as there Court ruled:
is no showing that management prerogatives were exercised in a manner
contrary to law.[27] ABS-CBN contends that being the largest media and What is involved in this case is an unwritten company policy considering any
entertainment company in the country, its reputation stems not only from its employee who files a certificate of candidacy for any elective or local office as
ability to deliver quality entertainment programs but also because of neutrality resigned from the company. Although 11(b) of R.A. No. 6646 does not require
and impartiality in delivering news.[28] mass media commentators and announcers such as private respondent to resign
from their radio or TV stations but only to go on leave for the duration of the
ABS-CBN further argues that nothing in the company policy prohibits its campaign period, we think that the company may nevertheless validly require
employees from either accepting a public appointive position or from running them to resign as a matter of policy. In this case, the policy is justified on the
for public office. Thus, it cannot be considered as violative of the constitutional following grounds:
right of suffrage. Moreover, the Supreme Court has recognized the employers
right to enforce occupational qualifications as long as the employer is able to Working for the government and the company at the same time is clearly
show the existence of a reasonable business necessity in imposing the questioned disadvantageous and prejudicial to the rights and interest not only of the
policy. Here, Policy No. HR-ER-016 itself states that it was issued to protect the company but the public as well. In the event an employee wins in an election, he
company from any public misconceptions and [t]o preserve its objectivity, cannot fully serve, as he is expected to do, the interest of his employer. The
neutrality and credibility. Thus, it cannot be denied that it is reasonable under the employee has to serve two (2) employers, obviously detrimental to the interest of
circumstances.[29] both the government and the private employer.
ABS-CBN likewise opposes Ymbongs claim that he was terminated. ABS-CBN In the event the employee loses in the election, the impartiality and cold
argues that on the contrary, Ymbongs unilateral act of filing his certificate of neutrality of an employee as broadcast personality is suspect, thus readily
candidacy is an overt act tantamount to voluntary resignation on his part by eroding and adversely affecting the confidence and trust of the listening public to
virtue of the clear mandate found in Policy No. HR-ER-016. Ymbong, however, employers station.[33]
failed to file his resignation and in fact misled his superiors by making them
believe that he was going on leave to campaign for the administration candidates ABS-CBN, like Manila Broadcasting Company, also had a valid justification for
but in fact, he actually ran for councilor. He also claims to have fully Policy No. HR-ER-016. Its rationale is embodied in the policy itself, to wit:
Rationale:
BAUTISTA, Coleen Joyce Q. Page 18 of 58
ABS-CBN BROADCASTING CORPORATION strongly believes that it is to The CA correctly ruled that though Luzon, as Assistant Station Manager for
the best interest of the company to continuously remain apolitical. While it Radio of ABS-CBN, has policy-making powers in relation to his principal task
encourages and supports its employees to have greater political awareness of administering the networks radio station in the Cebu region, the exercise of
and for them to exercise their right to suffrage, the company, however, such power should be in accord with the general rules and regulations imposed
prefers to remain politically independent and unattached to any political by the ABS-CBN Head Office to its employees. Clearly, the March 25,
individual or entity. 1998 Memorandum issued by Luzon which only requires employees to go on
leave if they intend to run for any elective position is in absolute contradiction
Therefore, employees who [intend] to run for public office or accept political with Policy No. HR-ER-016 issued by the ABS-CBN Head Office in Manila
appointment should resign from their positions, in order to protect the which requires the resignation, not only the filing of a leave of absence, of any
company from any public misconceptions. To preserve its objectivity, employee who intends to run for public office. Having been issued beyond the
neutrality and credibility, the company reiterates the following policy scope of his authority, the March 25, 1998 Memorandum is therefore void and
guidelines for strict implementation. did not supersede Policy No. HR-ER-016.
x x x x[34] [Emphasis supplied.] Also worth noting is that Luzon in his Sworn Statement admitted the inaccuracy
of his recollection of the company policy when he issued the March 25, 1998
We have consistently held that so long as a companys management prerogatives
Memorandum and stated therein that upon double-checking of the exact text of
are exercised in good faith for the advancement of the employers interest and not
the policy statement and subsequent confirmation with the ABS-CBN Head
for the purpose of defeating or circumventing the rights of the employees under
Office in Manila, he learned that the policy required resignation for those who
special laws or under valid agreements, this Court will uphold them.[35] In the
will actually run in elections because the company wanted to maintain its
instant case, ABS-CBN validly justified the implementation of Policy No. HR-
independence. Since the officer who himself issued the subject memorandum
ER-016. It is well within its rights to ensure that it maintains its objectivity and
acknowledged that it is not in harmony with the Policy issued by the upper
credibility and freeing itself from any appearance of impartiality so that the
management, there is no reason for it to be a source of right for Ymbong.
confidence of the viewing and listening public in it will not be in any way
eroded. Even as the law is solicitous of the welfare of the employees, it must Ymbong is deemed resigned when he ran for councilor.
also protect the right of an employer to exercise what are clearly management
prerogatives. The free will of management to conduct its own business affairs to As Policy No. HR-ER-016 is the subsisting company policy and not Luzons
achieve its purpose cannot be denied.[36] March 25, 1998 Memorandum, Ymbong is deemed resigned when he ran for
councilor.
It is worth noting that such exercise of management prerogative has earned a
stamp of approval from no less than our Congress itself when on February 12, We find no merit in Ymbongs argument that [his] automatic termination x x x
2001, it enacted Republic Act No. 9006, otherwise known as the Fair Election was a blatant [disregard] of [his] right to due process as he was never asked to
Act. Section 6.6 thereof reads: explain why he did not tender his resignation before he ran for public office as
mandated by [the subject company policy].[37] Ymbongs overt act of running for
6.6. Any mass media columnist, commentator, announcer, reporter, on-air councilor of Lapu-Lapu City is tantamount to resignation on his part. He was
correspondent or personality who is a candidate for any elective public separated from ABS-CBN not because he was dismissed but because he
office or is a campaign volunteer for or employed or retained in any resigned. Since there was no termination to speak of, the requirement of due
capacity by any candidate or political party shall be deemed resigned, if so process in dismissal cases cannot be applied to Ymbong. Thus, ABS-CBN is not
required by their employer, or shall take a leave of absence from his/her work duty-bound to ask him to explain why he did not tender his resignation before he
as such during the campaign period: Provided, That any media practitioner who ran for public office as mandated by the subject company policy.
is an official of a political party or a member of the campaign staff of a candidate
or political party shall not use his/her time or space to favor any candidate or In addition, we do not subscribe to Ymbongs claim that he was not in a position
political party. [Emphasis and underscoring supplied.] to know which of the two issuances was correct. Ymbong most likely than not, is
fully aware that the subsisting policy is Policy No. HR-ER-016 and not the
Policy No. HR-ER-016 was not superseded by the March 25, 1998 March 25, 1998 Memorandum and it was for this reason that, as stated by Luzon
Memorandum in his Sworn Statement, he only told the latter that he will only campaign for the
administration ticket and not actually run for an elective post. Ymbong claims he

BAUTISTA, Coleen Joyce Q. Page 19 of 58


had fully apprised Luzon by letter of his plan to run and even filed a leave of Dr. Fuentes performed and completed the hysterectomy. Afterwards, Dr. Ampil
absence but records are bereft of any proof of said claim. Ymbong claims that took over, completed the operation and closed the incision. However, the
the letter stating his intention to go on leave to run in the election is attached to operation appeared to be flawed. In the corresponding Record of Operation dated
his Position Paper as Annex A, a perusal of said pleading attached to his petition April 11, 1984, the attending nurses entered these remarks:
before this Court, however, show that Annex A was not his letter to Luzon but
the September 14, 1998 Memorandum informing Ymbong that his services had sponge count lacking 2
been automatically terminated when he ran for a local government position. announced to surgeon searched done (sic) but to no avail continue for closure.
Moreover, as pointed out by ABS-CBN, had Ymbong been truthful to his After a couple of days, Natividad complained of excruciating pain in her anal
superiors, they would have been able to clarify to him the prevailing company region. She consulted both Dr. Ampil and Dr. Fuentes about it. They told her that
policy and inform him of the consequences of his decision in case he decides to the pain was the natural consequence of the surgical operation performed upon
run, as Luzon did in Patalinghugs case. her. Dr. Ampil recommended that Natividad consult an oncologist to treat the
WHEREFORE, the petition for review on certiorari is DENIED for lack of cancerous nodes which were not removed during the operation.
merit. On May 9, 1984, Natividad, accompanied by her husband, went to the United
With costs against petitioner. States to seek further treatment. After four (4) months of consultations and
laboratory examinations, Natividad was told that she was free of cancer. Hence,
SO ORDERED. she was advised to return to the Philippines.
On August 31, 1984, Natividad flew back to the Philippines, still suffering from
pains. Two (2) weeks thereafter, her daughter found a piece of gauze protruding
Professional Services v CA from her vagina. Dr. Ampil was immediately informed. He proceeded to
Natividad’s house where he managed to extract by hand a piece of gauze
As the hospital industry changes, so must the laws and jurisprudence governing
measuring 1.5 inches in width. Dr. Ampil then assured Natividad that the pains
hospital liability. The immunity from medical malpractice traditionally accorded
would soon vanish.
to hospitals has to be eroded if we are to balance the interest of the patients and
hospitals under the present setting. Despite Dr. Ampil’s assurance, the pains intensified, prompting Natividad to
seek treatment at the Polymedic General Hospital. While confined thereat, Dr.
Before this Court is a motion for reconsideration filed by Professional Services,
Ramon Gutierrez detected the presence of a foreign object in her vagina -- a
Inc. (PSI), petitioner in G.R. No. 126297, assailing the Court’s First Division
foul-smelling gauze measuring 1.5 inches in width. The gauze had badly
Decision dated January 31, 2007, finding PSI and Dr. Miguel Ampil, petitioner
infected her vaginal vault. A recto-vaginal fistula had formed in her reproductive
in G.R. No. 127590, jointly and severally liable for medical negligence.
organ which forced stool to excrete through the vagina. Another surgical
A brief revisit of the antecedent facts is imperative. operation was needed to remedy the situation. Thus, in October 1984, Natividad
underwent another surgery.
On April 4, 1984, Natividad Agana was admitted at the Medical City General
Hospital (Medical City) because of difficulty of bowel movement and bloody On November 12, 1984, Natividad and her husband filed with the Regional Trial
anal discharge. Dr. Ampil diagnosed her to be suffering from "cancer of the Court, Branch 96, Quezon City a complaint for damages against PSI (owner of
sigmoid." Thus, on April 11, 1984, Dr. Ampil, assisted by the medical staff1 of Medical City), Dr. Ampil and Dr. Fuentes.
Medical City, performed an anterior resection surgery upon her. During the
On February 16, 1986, pending the outcome of the above case, Natividad died.
surgery, he found that the malignancy in her sigmoid area had spread to her left
She was duly substituted by her above-named children (the Aganas).
ovary, necessitating the removal of certain portions of it. Thus, Dr. Ampil
obtained the consent of Atty. Enrique Agana, Natividad’s husband, to permit Dr. On March 17, 1993, the trial court rendered judgment in favor of spouses Agana
Juan Fuentes, respondent in G.R. No. 126467, to perform hysterectomy upon finding PSI, Dr. Ampil and Dr. Fuentes jointly and severally liable. On appeal,
Natividad. the Court of Appeals, in its Decision dated September 6, 1996, affirmed the
assailed judgment with modification in the sense that the complaint against Dr.
Fuentes was dismissed.
BAUTISTA, Coleen Joyce Q. Page 20 of 58
PSI, Dr. Ampil and the Aganas filed with this Court separate petitions for review generally, evidence of accreditation by the appropriate board (diplomate),
on certiorari. On January 31, 2007, the Court, through its First Division, evidence of fellowship in most cases, and references. These requirements are
rendered a Decision holding that PSI is jointly and severally liable with Dr. carefully scrutinized by members of the hospital administration or by a review
Ampil for the following reasons: first, there is an employer-employee committee set up by the hospital who either accept or reject the application. This
relationship between Medical City and Dr. Ampil. The Court relied on Ramos v. is particularly true with respondent hospital.
Court of Appeals,2 holding that for the purpose of apportioning responsibility in
medical negligence cases, an employer-employee relationship in effect After a physician is accepted, either as a visiting or attending consultant, he
exists between hospitals and their attending and visiting physicians; second, is normally required to attend clinico-pathological conferences, conduct
PSI’s act of publicly displaying in the lobby of the Medical City the names and bedside rounds for clerks, interns and residents, moderate grand rounds
specializations of its accredited physicians, including Dr. Ampil, estopped it and patient audits and perform other tasks and responsibilities, for the
from denying the existence of an employer-employee relationship between them privilege of being able to maintain a clinic in the hospital, and/or for the
under the doctrine of ostensible agency or agency by estoppel;and third, PSI’s privilege of admitting patients into the hospital. In addition to these, the
failure to supervise Dr. Ampil and its resident physicians and nurses and to take physician’s performance as a specialist is generally evaluated by a peer
an active step in order to remedy their negligence rendered it directly liable review committee on the basis of mortality and morbidity statistics, and
under the doctrine of corporate negligence. feedback from patients, nurses, interns and residents. A consultant remiss in
his duties, or a consultant who regularly falls short of the minimum
In its motion for reconsideration, PSI contends that the Court erred in finding it standards acceptable to the hospital or its peer review committee, is
liable under Article 2180 of the Civil Code, there being no employer-employee normally politely terminated.
relationship between it and its consultant, Dr. Ampil. PSI stressed that the
Court’s Decision in Ramos holding that "an employer-employee relationship in In other words, private hospitals hire, fire and exercise real control over their
effect exists between hospitals and their attending and visiting physicians for the attending and visiting "consultant" staff. While "consultants" are not,
purpose of apportioning responsibility" had been reversed in a subsequent technically employees, a point which respondent hospital asserts in denying
Resolution.3 Further, PSI argues that the doctrine of ostensible agency or all responsibility for the patient’s condition, the control exercised, the
agency by estoppelcannot apply because spouses Agana failed to establish one hiring, and the right to terminate consultants all fulfill the important
requisite of the doctrine, i.e., that Natividad relied on the representation of the hallmarks of an employer-employee relationship, with the exception of the
hospital in engaging the services of Dr. Ampil. And lastly, PSI maintains that payment of wages. In assessing whether such a relationship in fact exists,
the doctrine of corporate negligence is misplaced because the proximate cause the control test is determining. Accordingly, on the basis of the foregoing, we
of Natividad’s injury was Dr. Ampil’s negligence. rule that for the purpose of allocating responsibility in medical negligence
cases, an employer-employee relationship in effect exists between hospitals
The motion lacks merit. and their attending and visiting physicians.This being the case, the question
now arises as to whether or not respondent hospital is solidarily liable with
As earlier mentioned, the First Division, in its assailed Decision, ruled that an respondent doctors for petitioner’s condition.
employer-employee relationship "in effect" exists between the Medical City
and Dr. Ampil. Consequently, both are jointly and severally liable to the Aganas. The basis for holding an employer solidarily responsible for the negligence of its
This ruling proceeds from the following ratiocination in Ramos: employee is found in Article 2180 of the Civil Code which considers a person
accountable not only for his own acts but also for those of others based on the
We now discuss the responsibility of the hospital in this particular incident. The former’s responsibility under a relationship of partia ptetas.
unique practice (among private hospitals) of filling up specialist staff with
attending and visiting "consultants," who are allegedly not hospital employees, Clearly, in Ramos, the Court considered the peculiar relationship between a
presents problems in apportioning responsibility for negligence in medical hospital and its consultants on the bases of certain factors. One such factor is the
malpractice cases. However, the difficulty is only more apparent than real. "control test" wherein the hospital exercises control in the hiring and firing of
consultants, like Dr. Ampil, and in the conduct of their work.
In the first place, hospitals exercise significant control in the hiring and firing
of consultants and in the conduct of their work within the hospital premises. Actually, contrary to PSI’s contention, the Court did not reverse its ruling
Doctors who apply for "consultant" slots, visiting or attending, are required to in Ramos. What it clarified was that the De Los Santos Medical Clinic did not
submit proof of completion of residency, their educational qualifications; exercise control over its consultant, hence, there is no employer-employee

BAUTISTA, Coleen Joyce Q. Page 21 of 58


relationship between them. Thus, despite the granting of the said hospital’s [1969], citing Sec. 3, par. A, Rule 131 of the Rules of Court. See also King v.
motion for reconsideration, the doctrine in Ramos stays, i.e., for the purpose of Mitchell, 31 A.D.3rd 958, 819 N.Y.S.2d 169 [2006]).
allocating responsibility in medical negligence cases, an employer-employee
relationship exists between hospitals and their consultants. xxx

In the instant cases, PSI merely offered a general denial of responsibility, The second factor focuses on the patient’s reliance. It is sometimes characterized
maintaining that consultants, like Dr. Ampil, are "independent contractors," not as an inquiry on whether the plaintiff acted in reliance upon the conduct of the
employees of the hospital. Even assuming that Dr. Ampil is not an employee of hospital or its agent, consistent with ordinary care and prudence. (Diggs v.
Medical City, but an independent contractor, still the said hospital is liable to the Novant Health, Inc.)
Aganas. PSI argues that the doctrine of apparent authority cannot apply to these cases
In Nograles, et al. v. Capitol Medical Center, et al.,4 through Mr. Justice Antonio because spouses Agana failed to establish proof of their reliance on the
T. Carpio, the Court held: representation of Medical City that Dr. Ampil is its employee.

The question now is whether CMC is automatically exempt from liability The argument lacks merit.
considering that Dr. Estrada is an independent contractor-physician. Atty. Agana categorically testified that one of the reasons why he chose Dr.
In general, a hospital is not liable for the negligence of an independent Ampil was that he knew him to be a staff member of Medical City, a
contractor-physician. There is, however, an exception to this principle. The prominent and known hospital.
hospital may be liable if the physician is the "ostensible" agent of the hospital. Q Will you tell us what transpired in your visit to Dr. Ampil?
(Jones v. Philpott, 702 F. Supp. 1210 [1988]) This exception is also known as the
"doctrine of apparent authority." (Sometimes referred to as the apparent or A Well, I saw Dr. Ampil at the Medical City, I know him to be a staff
ostensible agency theory. [King v. Mitchell, 31 A.D.3rd 958, 819 N.Y. S.2d 169 member there, and I told him about the case of my wife and he asked me to
(2006)]. bring my wife over so she could be examined. Prior to that, I have known Dr.
Ampil, first, he was staying in front of our house, he was a neighbor, second, my
xxx daughter was his student in the University of the East School of Medicine at
The doctrine of apparent authority essentially involves two factors to determine Ramon Magsaysay; and when my daughter opted to establish a hospital or a
the liability of an independent contractor-physician. clinic, Dr. Ampil was one of our consultants on how to establish that hospital.
And from there, I have known that he was a specialist when it comes to that
The first factor focuses on the hospital’s manifestations and is sometimes illness.
described as an inquiry whether the hospital acted in a manner which would lead
a reasonable person to conclude that the individual who was alleged to be Atty. Agcaoili
negligent was an employee or agent of the hospital. (Diggs v. Novant Health, On that particular occasion, April 2, 1984, what was your reason for choosing to
Inc., 628 S.E.2d 851 (2006) citing Hylton v. Koontz, 138 N.C. App. 629 contact Dr. Ampil in connection with your wife’s illness?
(2000). In this regard, the hospital need not make express representations to
the patient that the treating physician is an employee of the hospital; rather A First, before that, I have known him to be a specialist on that part of the body
a representation may be general and implied. (Id.) as a surgeon; second, I have known him to be a staff member of the Medical
City which is a prominent and known hospital. And third, because he is a
The doctrine of apparent authority is a specie of the doctrine of estoppel. Article neighbor, I expect more than the usual medical service to be given to us, than his
1431 of the Civil Code provides that "[t]hrough estoppel, an admission or ordinary patients.5
representation is rendered conclusive upon the person making it, and cannot be
denied or disproved as against the person relying thereon." Estoppel rests on this Clearly, PSI is estopped from passing the blame solely to Dr. Ampil. Its act of
rule: "Whether a party has, by his own declaration, act, or omission, displaying his name and those of the other physicians in the public directory at
intentionally and deliberately led another to believe a particular thing true, and to the lobby of the hospital amounts to holding out to the public that it offers
act upon such belief, he cannot, in any litigation arising out of such declaration, quality medical service through the listed physicians. This justifies Atty. Agana’s
act or omission, be permitted to falsify it. (De Castro v. Ginete, 137 Phil. 453 belief that Dr. Ampil was a member of the hospital’s staff. It must be stressed

BAUTISTA, Coleen Joyce Q. Page 22 of 58


that under the doctrine of apparent authority, the question in every case is A I am not in the position to answer that, sir.
whether the principal has by his voluntary act placed the agent in such a
situation that a person of ordinary prudence, conversant with business Q You never did hear the hospital investigating the doctors involved in
usages and the nature of the particular business, is justified in presuming this case of those missing sponges, or did you hear something?
that such agent has authority to perform the particular act in question.6 In xxxxxx
these cases, the circumstances yield a positive answer to the question.
A I think we already made a report by just saying that two sponges were
The challenged Decision also anchors its ruling on the doctrine of corporate missing, it is up to the hospital to make the move.
responsibility.7 The duty of providing quality medical service is no longer the
sole prerogative and responsibility of the physician. This is because the modern Atty. Agana
hospital now tends to organize a highly-professional medical staff whose
competence and performance need also to be monitored by the hospital Precisely, I am asking you if the hospital did a move, if the hospital did a
commensurate with its inherent responsibility to provide quality medical care. move.
8 Such responsibility includes the proper supervision of the members of its
medical staff. Accordingly, the hospital has the duty to make a reasonable A I cannot answer that.
effort to monitor and oversee the treatment prescribed and administered by Court
the physicians practicing in its premises.
By that answer, would you mean to tell the Court that you were aware if
Unfortunately, PSI had been remiss in its duty. It did not conduct an immediate there was such a move done by the hospital?
investigation on the reported missing gauzes to the great prejudice and agony of
its patient. Dr. Jocson, a member of PSI’s medical staff, who testified on whether A I cannot answer that, your honor, because I did not have any more
the hospital conducted an investigation, was evasive, thus: follow-up of the case that happened until now.9
Q We go back to the operative technique, this was signed by Dr. The above testimony obviously shows Dr. Jocson’s lack of concern for the
Puruganan, was this submitted to the hospital? patients. Such conduct is reflective of the hospital’s manner of supervision.
Not only did PSI breach its duty to oversee or supervise all persons who
A Yes, sir, this was submitted to the hospital with the record of the practice medicine within its walls, it also failed to take an active step in
patient. fixing the negligence committed. This renders PSI, not only vicariously liable
Q Was the hospital immediately informed about the missing sponges? for the negligence of Dr. Ampil under Article 2180 of the Civil Code, but
also directly liable for its own negligence under Article 2176.
A That is the duty of the surgeon, sir.
Moreover, there is merit in the trial court’s finding that the failure of PSI to
Q As a witness to an untoward incident in the operating room, was it not conduct an investigation "established PSI’s part in the dark conspiracy of
your obligation, Dr., to also report to the hospital because you are under the silence and concealment about the gauzes." The following testimony of Atty.
control and direction of the hospital? Agana supports such findings, thus:

A The hospital already had the record of the two OS missing, sir. Q You said you relied on the promise of Dr. Ampil and despite the promise
you were not able to obtain the said record. Did you go back to the record
Q If you place yourself in the position of the hospital, how will you custodian?
recover.
A I did not because I was talking to Dr. Ampil. He promised me.
A You do not answer my question with another question.
Q After your talk to Dr. Ampil, you went to the record custodian?
Q Did the hospital do anything about the missing gauzes?
A I went to the record custodian to get the clinical record of my wife, and
A The hospital left it up to the surgeon who was doing the operation, sir. I was given a portion of the records consisting of the findings, among them,
Q Did the hospital investigate the surgeon who did the operation?
BAUTISTA, Coleen Joyce Q. Page 23 of 58
the entries of the dates, but not the operating procedure and operative regulations; (6) [Estanislao] Agbay directly paid petitioner’s salaries and
report.10 controlled all aspects of his employment and (7) petitioner rendered work
necessary and desirable in the business of the respondent company
In sum, we find no merit in the motion for reconsideration.
WHEREFORE, we DENY PSI’s motion for reconsideration with finality.
BERNARD A. TENAZAS, JAIME M. FRANCISCO and ISIDRO G.
SO ORDERED. ENDRACA, Petitioners,
SOUTH EAST INTERNATIONAL RATTAN INC V. JESUS J. COMING vs.

(G.R. NO. 186621) R. VILLEGAS TAXI TRANSPORT and ROMUALDO
VILLEGAS, Respondents.
Facts:
DECISION
Petitioner South East International Rattan is a domestic corporation engaged in
the business of manufacturing and exporting furniture to various countries. REYES, J.:
Respondent Coming was hired by petitioner as Sizing Machine Operator whose
work is initially compensated on ‘pakiao basis’ but sometime was fixed per day This is a petition for review on certiorari1 filed under Rule 45 of the Rules of
and a work schedule of 8:00am to 5:00pm. Without any apparent reason, his Court, assailing the Decision2 dated March 11, 2010 and Resolution3 dated June
employment was interrupted as he was told by petitioners to resume work in 2 28, 2010 of the Court of Appeals (CA) in CA-G.R. SP No. 111150, which
months time but was never called back. Respondent thus filed a complaint affirmed with modification the Decision4 dated June 23, 2009 of the National
before the regional arbitration branch. The Labor Arbiter ruled respondent as a Labor Relations Commission (NLRC) in NLRC LAC Case No. 07-002648-08.
regular employee of petitioner SEIRI but on appeal, was reversed by the NLRC.
CA then reversed the NLRC decision and ruled that there existed an employer- The Antecedent Facts
employee relationship between petitioners and respondent. On July 4, 2007, Bernard A. Tenazas (Tenazas) and Jaime M. Francisco
Issue: (Francisco) filed a complaint for illegal dismissal against R. Villegas Taxi
Transport and/or Romualdo Villegas (Romualdo) and Andy Villegas (Andy)
Whether or not there is employer-employee relationship between petitioner and (respondents). At that time, a similar case had already been filed by Isidro G.
respondent. Endraca (Endraca) against the same respondents. The two (2) cases were
subsequently consolidated.5
Ruling: YES.
In their position paper,6 Tenazas, Francisco and Endraca (petitioners) alleged that
We affirm the CA. they were hired and dismissed by the respondents on the following dates:
To ascertain the existence of employer-employee relationship jurisprudence has
invariably adhered to the four-fold test, to wit: (1) the selection and engagement Name Date of Hiring Date of Dismissal Salary
of the employee; (2) the payment of wages; (3) the power of dismissal; and (4)
Bernard A. Tenazas 10/1997 07/03/07 Boundary System
the power to control the employee’s conduct, or the so-called “control test.”
Jaime M. Francisco 04/10/04 06/04/07 Boundary System
x x x As to the “control test”, the following facts indubitably reveal that
respondents wielded control over the work performance of petitioner, to wit: (1) Isidro G. Endraca 04/2000 03/06/06 Boundary System7
they required him to work within the company premises; (2) they obliged
petitioner to report every day of the week and tasked him to usually perform the Relaying the circumstances of his dismissal, Tenazas alleged that on July 1,
same job; (3) they enforced the observance of definite hours of work from 8 2007, the taxi unit assigned to him was sideswiped by another vehicle, causing a
o’clock in the morning to 5 o’clock in the afternoon; (4) the mode of payment of dent on the left fender near the driver seat. The cost of repair for the damage was
petitioner’s salary was under their discretion, at first paying him on pakiao basis estimated at ₱500.00. Upon reporting the incident to the company, he was
and thereafter, on daily basis; (5) they implemented company rules and scolded by respondents Romualdo and Andy and was told to leave the garage for
BAUTISTA, Coleen Joyce Q. Page 24 of 58
he is already fired. He was even threatened with physical harm should he ever be On May 29, 2008, the petitioners, by registered mail, filed a Motion to Admit
seen in the company’s premises again. Despite the warning, Tenazas reported for Additional Evidence.14 They alleged that after diligent efforts, they were able to
work on the following day but was told that he can no longer drive any of the discover new pieces of evidence that will substantiate the allegations in their
company’s units as he is already fired.8 position paper. Attached with the motion are the following: (a) Joint Affidavit of
the petitioners;15 (2) Affidavit of Good Faith of Aloney Rivera, a co-driver;16 (3)
Francisco, on the other hand, averred that his dismissal was brought about by the pictures of the petitioners wearing company shirts;17 and (4) Tenazas’
company’s unfounded suspicion that he was organizing a labor union. He was Certification/Record of Social Security System (SSS) contributions.18
instantaneously terminated, without the benefit of procedural due process, on
June 4, 2007.9 The Ruling of the Labor Arbiter
Endraca, for his part, alleged that his dismissal was instigated by an occasion On May 30, 2008, the Labor Arbiter (LA) rendered a Decision,19 which
when he fell short of the required boundary for his taxi unit. He related that pertinently states, thus:
before he was dismissed, he brought his taxi unit to an auto shop for an urgent
repair. He was charged the amount of ₱700.00 for the repair services and the In the case of complainant Jaime Francisco, respondents categorically denied the
replacement parts. As a result, he was not able to meet his boundary for the day. existence of an employer-employee relationship. In this situation, the burden of
Upon returning to the company garage and informing the management of the proof shifts to the complainant to prove the existence of a regular employment.
incident, his driver’s license was confiscated and was told to settle the deficiency Complainant Francisco failed to present evidence of regular employment
in his boundary first before his license will be returned to him. He was no longer available to all regular employees, such as an employment contract, company
allowed to drive a taxi unit despite his persistent pleas.10 ID, SSS, withholding tax certificates, SSS membership and the like.

For their part, the respondents admitted that Tenazas and Endraca were In the case of complainant Isidro Endraca, respondents claim that he was only an
employees of the company, the former being a regular driver and the latter a extra driver who stopped reporting to queue for available taxi units which he
spare driver. The respondents, however, denied that Francisco was an employee could drive. In fact, respondents offered him in their Position Paper on record,
of the company or that he was able to drive one of the company’s units at any immediate reinstatement as extra taxi driver which offer he refused.
point in time.11 In case of Bernard Tenazas, he was told to wait while his taxi was under repair
The respondents further alleged that Tenazas was never terminated by the but he did not report for work after the taxi was repaired. Respondents[,] in their
company. They claimed that on July 3, 2007, Tenazas went to the company Position Paper, on record likewise, offered him immediate reinstatement, which
garage to get his taxi unit but was informed that it is due for overhaul because of offer he refused.
some mechanical defects reported by the other driver who takes turns with him We must bear in mind that the complaint herein is one of actual dismissal. But
in using the same. He was thus advised to wait for further notice from the there was no formal investigations, no show cause memos, suspension memos or
company if his unit has already been fixed. On July 8, 2007, however, upon termination memos were never issued. Otherwise stated, there is no proof of
being informed that his unit is ready for release, Tenazas failed to report back to overt act of dismissal committed by herein respondents.
work for no apparent reason.12
We are therefore constrained to rule that there was no illegal dismissal in the
As regards Endraca, the respondents alleged that they hired him as a spare driver case at bar.
in February 2001. They allow him to drive a taxi unit whenever their regular
driver will not be able to report for work. In July 2003, however, Endraca The situations contemplated by law for entitlement to separation pay does [sic]
stopped reporting for work without informing the company of his reason. not apply.
Subsequently, the respondents learned that a complaint for illegal dismissal was
filed by Endraca against them. They strongly maintained, however, that they WHEREFORE, premises considered, instant consolidated complaints are hereby
could never have terminated Endraca in March 2006 since he already stopped dismissed for lack of merit.
reporting for work as early as July 2003. Even then, they expressed willingness
to accommodate Endraca should he wish to work as a spare driver for the SO ORDERED.20
company again since he was never really dismissed from employment anyway.13 The Ruling of the NLRC

BAUTISTA, Coleen Joyce Q. Page 25 of 58


Unyielding, the petitioners appealed the decision of the LA to the NLRC. On July 24, 2009, the respondents filed a motion for reconsideration but the
Subsequently, on June 23, 2009, the NLRC rendered a Decision,21 reversing the NLRC denied the same in its Resolution23 dated September 23, 2009.
appealed decision of the LA, holding that the additional pieces of evidence
belatedly submitted by the petitioners sufficed to establish the existence of The Ruling of the CA
employer-employee relationship and their illegal dismissal. It held, thus: Unperturbed, the respondents filed a petition for certiorari with the CA. On
In the challenged decision, the Labor Arbiter found that it cannot be said that the March 11, 2010, the CA rendered a Decision,24 affirming with modification the
complainants were illegally dismissed, there being no showing, in the first place, Decision dated June 23, 2009 of the NLRC. The CA agreed with the NLRC’s
that the respondent [sic] terminated their services. A portion thereof reads: finding that Tenazas and Endraca were employees of the company, but ruled
otherwise in the case of Francisco for failing to establish his relationship with
"We must bear in mind that the complaint herein is one of actual dismissal. But the company. It also deleted the award of separation pay and ordered for
there were no formal investigations, no show cause memos, suspension memos reinstatement of Tenazas and Endraca. The pertinent portions of the decision
or termination memos were never issued. Otherwise stated, there is no proof of read as follows:
overt act of dismissal committed by herein respondents.
At the outset, We declare that respondent Francisco failed to prove that an
We are therefore constrained to rule that there was no illegal dismissal in the employer-employee relationship exists between him and R. Transport. If there is
case at bar." no employer-employee relationship in the first place, the duty of R. Transport to
adhere to the labor standards provisions of the Labor Code with respect to
Issue: [W]hether or not the complainants were illegally dismissed from Francisco is questionable.
employment.
xxxx
It is possible that the complainants’ Motion to Admit Additional Evidence did
not reach the Labor Arbiter’s attention because he had drafted the challenged Although substantial evidence is not a function of quantity but rather of quality,
decision even before they submitted it, and thereafter, his staff attended only to the peculiar environmental circumstances of the instant case demand that
clerical matters, and failed to bring the motion in question to his attention. It is something more should have been proffered. Had there been other proofs of
now up to this Commission to consider the complainants’ additional evidence. employment, such as Francisco’s inclusion in R.R.
Anyway, if this Commission must consider evidence submitted for the first time
on appeal (Andaya vs. NLRC, G.R. No. 157371, July 15, 2005), much more so Transport’s payroll, this Court would have affirmed the finding of employer-
must it consider evidence that was simply overlooked by the Labor Arbiter. employee relationship.1âwphi1 The NLRC, therefore, committed grievous error
in ordering R. Transport to answer for Francisco’s claims.
Among the additional pieces of evidence submitted by the complainants are the
following: (1) joint affidavit (records, p. 51-52) of the three (3) complainants; (2) We now tackle R. Transport’s petition with respect to Tenazas and Endraca, who
affidavit (records, p. 53) of Aloney Rivera y Aldo; and (3) three (3) pictures are both admitted to be R. Transport’s employees. In its petition, R. Transport
(records, p. 54) referred to by the complainant in their joint affidavit showing puts forth the theory that it did not terminate the services of respondents but that
them wearing t-shirts bearing the name and logo of the respondent’s company. the latter deliberately abandoned their work. We cannot subscribe to this theory.

xxxx xxxx

WHEREFORE, the decision appealed from is hereby REVERSED. Respondent Considering that the complaints for illegal dismissal were filed soon after the
Rom[u]aldo Villegas doing business under the name and style Villegas Taxi alleged dates of dismissal, it cannot be inferred that respondents Tenazas and
Transport is hereby ordered to pay the complainants the following (1) full Endraca intended to abandon their employment. The complainants for dismissal
backwages from the date of their dismissal (July 3, 2007 for Tena[z]as, June 4, are, in themselves, pleas for the continuance of employment. They are
2004 for Francisco, and March 6, 2006 for Endraca[)] up to the date of the incompatible with the allegation of abandonment. x x x.
finality of this decision[;] (2) separation pay equivalent to one month for every For R. Transport’s failure to discharge the burden of proving that the dismissal of
year of service; and (3) attorney’s fees equivalent to ten percent (10%) of the respondents Tenazas and Endraca was for a just cause, We are constrained to
total judgment awards. uphold the NLRC’s conclusion that their dismissal was not justified and that
SO ORDERED.22 they are entitled to back wages. Because they were illegally dismissed, private
BAUTISTA, Coleen Joyce Q. Page 26 of 58
respondents Tenazas and Endraca are entitled to reinstatement and back wages x additional pieces of evidence belatedly submitted by the petitioners, which it
x x. supposed, have been overlooked by the LA owing to the time when it was
received by the said office. It opined that the said pieces of evidence are
xxxx sufficient to establish the circumstances of their illegal termination. In particular,
it noted that in the affidavit of the petitioners, there were allegations about the
However, R. Transport is correct in its contention that separation pay should not
company’s practice of not issuing employment records and this was not rebutted
be awarded because reinstatement is still possible and has been offered. It is
by the respondents. It underscored that in a situation where doubt exists between
well[-]settled that separation pay is granted only in instances where
evidence presented by the employer and the employee, the scales of justice must
reinstatement is no longer feasible or appropriate, which is not the case here.
be tilted in favor of the employee. It awarded the petitioners with: (1) full
xxxx backwages from the date of their dismissal up to the finality of the decision; (2)
separation pay equivalent to one month of salary for every year of service; and
WHEREFORE, the Decision of the National Labor Relations Commission dated (3) attorney’s fees.
23 June 2009, in NLRC LAC Case No. 07-002648-08, and its Resolution dated
23 September 2009 denying reconsideration thereof are AFFIRMED with On petition for certiorari, the CA affirmed with modification the decision of the
MODIFICATION in that the award of Jaime Francisco’s claims is DELETED. NLRC, holding that there was indeed an illegal dismissal on the part of Tenazas
The separation pay granted in favor of Bernard Tenazas and Isidro Endraca is, and Endraca but not with respect to Francisco who failed to present substantial
likewise, DELETED and their reinstatement is ordered instead. evidence, proving that he was an employee of the respondents. The CA likewise
dismissed the respondents’ claim that Tenazas and Endraca abandoned their
SO ORDERED.25 (Citations omitted) work, asseverating that immediate filing of a complaint for illegal dismissal and
persistent pleas for continuance of employment are incompatible with
On March 19, 2010, the petitioners filed a motion for reconsideration but the abandonment. It also deleted the NLRC’s award of separation pay and instead
same was denied by the CA in its Resolution26 dated June 28, 2010. ordered that Tenazas and Endraca be reinstated.28
Undeterred, the petitioners filed the instant petition for review on certiorari "Well-settled is the rule that the jurisdiction of this Court in a petition for review
before this Court on July 15, 2010. on certiorari under Rule 45 of the Revised Rules of Court is limited to reviewing
The Ruling of this Court only errors of law, not of fact, unless the factual findings complained of are
completely devoid of support from the evidence on record, or the assailed
The petition lacks merit. judgment is based on a gross misapprehension of facts."29 The Court finds that
none of the mentioned circumstances is present in this case.
Pivotal to the resolution of the instant case is the determination of the existence
of employer-employee relationship and whether there was an illegal dismissal. In reviewing the decision of the NLRC, the CA found that no substantial
Remarkably, the LA, NLRC and the CA had varying assessment on the matters evidence was presented to support the conclusion that Francisco was an
at hand. The LA believed that, with the admission of the respondents, there is no employee of the respondents and accordingly modified the NLRC decision. It
longer any question regarding the status of both Tenazas and Endraca being stressed that with the respondents’ denial of employer-employee relationship, it
employees of the company. However, he ruled that the same conclusion does not behooved Francisco to present substantial evidence to prove that he is an
hold with respect to Francisco whom the respondents denied to have ever employee before any question on the legality of his supposed dismissal becomes
employed or known. With the respondents’ denial, the burden of proof shifts to appropriate for discussion. Francisco, however, did not offer evidence to
Francisco to establish his regular employment. Unfortunately, the LA found that substantiate his claim of employment with the respondents. Short of the required
Francisco failed to present sufficient evidence to prove regular employment such quantum of proof, the CA correctly ruled that the NLRC’s finding of illegal
as company ID, SSS membership, withholding tax certificates or similar articles. dismissal and the monetary awards which necessarily follow such ruling lacked
Thus, he was not considered an employee of the company. Even then, the LA factual and legal basis and must therefore be deleted.
held that Tenazas and Endraca could not have been illegally dismissed since
there was no overt act of dismissal committed by the respondents.27 The action of the CA finds support in Anonas Construction and Industrial Supply
Corp., et al. v. NLRC, et al.,30where the Court reiterated:
On appeal, the NLRC reversed the ruling of the LA and ruled that the petitioners
were all employees of the company. The NLRC premised its conclusion on the

BAUTISTA, Coleen Joyce Q. Page 27 of 58


[J]udicial review of decisions of the NLRC via petition for certiorari under Rule particular form of evidence or manner of proving the presence of employer-
65, as a general rule, is confined only to issues of lack or excess of jurisdiction employee relationship.
and grave abuse of discretion on the part of the NLRC. The CA does not assess
and weigh the sufficiency of evidence upon which the LA and the NLRC based In Opulencia Ice Plant and Storage v. NLRC,37 this Court emphasized, thus:
their conclusions. The issue is limited to the determination of whether or not the No particular form of evidence is required to prove the existence of an
NLRC acted without or in excess of its jurisdiction, or with grave abuse of employer-employee relationship. Any competent and relevant evidence to prove
discretion in rendering the resolution, except if the findings of the NLRC are not the relationship may be admitted. For, if only documentary evidence would be
supported by substantial evidence.31 (Citation omitted and emphasis ours) required to show that relationship, no scheming employer would ever be brought
It is an oft-repeated rule that in labor cases, as in other administrative and quasi- before the bar of justice, as no employer would wish to come out with any trace
judicial proceedings, "the quantum of proof necessary is substantial evidence, or of the illegality he has authored considering that it should take much weightier
such amount of relevant evidence which a reasonable mind might accept as proof to invalidate a written instrument.38
adequate to justify a conclusion."32 "[T]he burden of proof rests upon the party Here, Francisco simply relied on his allegation that he was an employee of the
who asserts the affirmative of an issue."33 Corollarily, as Francisco was claiming company without any other evidence supporting his claim. Unfortunately for
to be an employee of the respondents, it is incumbent upon him to proffer him, a mere allegation in the position paper is not tantamount to evidence.
evidence to prove the existence of said relationship. 39Bereft of any evidence, the CA correctly ruled that Francisco could not be

"[I]n determining the presence or absence of an employer-employee relationship, considered an employee of the respondents.
the Court has consistently looked for the following incidents, to wit: (a) the The CA’s order of reinstatement of Tenazas and Endraca, instead of the payment
selection and engagement of the employee; (b) the payment of wages; (c) the of separation pay, is also well in accordance with prevailing jurisprudence. In
power of dismissal; and (d) the employer’s power to control the employee on the Macasero v. Southern Industrial Gases Philippines,40 the Court reiterated, thus:
means and methods by which the work is accomplished. The last element, the
so-called control test, is the most important element."34 [A]n illegally dismissed employee is entitled to two reliefs: backwages and
reinstatement.1âwphi1 The two reliefs provided are separate and distinct. In
There is no hard and fast rule designed to establish the aforesaid elements. Any instances where reinstatement is no longer feasible because of strained relations
competent and relevant evidence to prove the relationship may be admitted. between the employee and the employer, separation pay is granted. In effect, an
Identification cards, cash vouchers, social security registration, appointment illegally dismissed employee is entitled to either reinstatement, if viable, or
letters or employment contracts, payrolls, organization charts, and personnel separation pay if reinstatement is no longer viable, and backwages.
lists, serve as evidence of employee status.35
The normal consequences of respondents’ illegal dismissal, then, are
In this case, however, Francisco failed to present any proof substantial enough to reinstatement without loss of seniority rights, and payment of backwages
establish his relationship with the respondents. He failed to present documentary computed from the time compensation was withheld up to the date of actual
evidence like attendance logbook, payroll, SSS record or any personnel file that reinstatement. Where reinstatement is no longer viable as an option, separation
could somehow depict his status as an employee. Anent his claim that he was not pay equivalent to one (1) month salary for every year of service should be
issued with employment records, he could have, at least, produced his social awarded as an alternative. The payment of separation pay is in addition to
security records which state his contributions, name and address of his employer, payment of backwages.41 (Emphasis supplied)
as his co-petitioner Tenazas did. He could have also presented testimonial
evidence showing the respondents’ exercise of control over the means and Clearly, it is only when reinstatement is no longer feasible that the payment of
methods by which he undertakes his work. This is imperative in light of the separation pay is ordered in lieu thereof. For instance, if reinstatement would
respondents’ denial of his employment and the claim of another taxi operator, only exacerbate the tension and strained relations between the parties, or where
Emmanuel Villegas (Emmanuel), that he was his employer. Specifically, in his the relationship between the employer and the employee has been unduly
Affidavit,36 Emmanuel alleged that Francisco was employed as a spare driver in strained by reason of their irreconcilable differences, it would be more prudent
his taxi garage from January 2006 to December 2006, a fact that the latter failed to order payment of separation pay instead of reinstatement.42
to deny or question in any of the pleadings attached to the records of this case.
The utter lack of evidence is fatal to Francisco’s case especially in cases like his This doctrine of strained relations, however, should not be used recklessly or
present predicament when the law has been very lenient in not requiring any applied loosely43 nor be based on impression alone. "It bears to stress that

BAUTISTA, Coleen Joyce Q. Page 28 of 58


reinstatement is the rule and, for the exception of strained relations to apply, it Manufacturers Life Insurance Co. (Phils.), Inc. (Manulife) is a domestic
should be proved that it is likely that if reinstated, an atmosphere of antipathy corporation engaged in life insurance business. Renato A. Vergel De Dios was,
and antagonism would be generated as to adversely affect the efficiency and during the period material, its President and Chief Executive Officer. Gregorio
productivity of the employee concerned."44 V. Tongko started his professional relationship with Manulife on July 1, 1977 by
virtue of a Career Agent's Agreement2 (Agreement) he executed with Manulife.
Moreover, the existence of strained relations, it must be emphasized, is a
question of fact. In Golden Ace Builders v. Talde,45 the Court underscored: In the Agreement, it is provided that:
Strained relations must be demonstrated as a fact, however, to be adequately It is understood and agreed that the Agent is an independent contractor and
supported by evidence—substantial evidence to show that the relationship nothing contained herein shall be construed or interpreted as creating an
between the employer and the employee is indeed strained as a necessary employer-employee relationship between the Company and the Agent.
consequence of the judicial controversy.46 (Citations omitted and emphasis ours)
xxxx
After a perusal of the NLRC decision, this Court failed to find the factual basis
of the award of separation pay to the petitioners. The NLRC decision did not a) The Agent shall canvass for applications for Life Insurance, Annuities, Group
state the facts which demonstrate that reinstatement is no longer a feasible option policies and other products offered by the Company, and collect, in exchange for
that could have justified the alternative relief of granting separation pay instead. provisional receipts issued by the Agent, money due or to become due to the
Company in respect of applications or policies obtained by or through the Agent
The petitioners themselves likewise overlooked to allege circumstances which or from policyholders allotted by the Company to the Agent for servicing,
may have rendered their reinstatement unlikely or unwise and even prayed for subject to subsequent confirmation of receipt of payment by the Company as
reinstatement alongside the payment of separation pay in their position paper. evidenced by an Official Receipt issued by the Company directly to the
47 A bare claim of strained relations by reason of termination is insufficient to policyholder.
warrant the granting of separation pay. Likewise, the filing of the complaint by
the petitioners does not necessarily translate to strained relations between the xxxx
parties. As a rule, no strained relations should arise from a valid and legal act The Company may terminate this Agreement for any breach or violation of any
asserting one’s right.48 Although litigation may also engender a certain degree of of the provisions hereof by the Agent by giving written notice to the Agent
hostility, the understandable strain in the parties’ relation would not necessarily within fifteen (15) days from the time of the discovery of the breach. No waiver,
rule out reinstatement which would, otherwise, become the rule rather the extinguishment, abandonment, withdrawal or cancellation of the right to
exception in illegal dismissal cases.49 Thus, it was a prudent call for the CA to terminate this Agreement by the Company shall be construed for any previous
delete the award of separation pay and order for reinstatement instead, in failure to exercise its right under any provision of this Agreement.
accordance with the general rule stated in Article 27950 of the Labor Code.
Either of the parties hereto may likewise terminate his Agreement at any time
Finally, the Court finds the computation of the petitioners' backwages at the rate without cause, by giving to the other party fifteen (15) days notice in writing. x x
of ₱800.00 daily reasonable and just under the circumstances. The said rate is x
consistent with the ruling of this Court in Hyatt Taxi Services, Inc. v. Catinoy,
51 which dealt with the same matter.
In 1983, Tongko was named as a Unit Manager in Manulife's Sales Agency
Organization. In 1990, he became a Branch Manager. As the CA found, Tongko's
WHEREFORE, in view of the foregoing disquisition, the petition for review on gross earnings from his work at Manulife, consisting of commissions,
certiorari is DENIED. The Decision dated March 11, 2010 and Resolution dated persistency income, and management overrides, may be summarized as follows:
June 28, 2010 of the Court of Appeals in CA-G.R. SP No. 111150 are
AFFIRMED.
SO ORDERED.

Tongko v Manulife

BAUTISTA, Coleen Joyce Q. Page 29 of 58


was taking. For this reason, I sought a meeting with everyone in your
January to December 10, 2002 - P 865,096.07
management team, including you, to clear the air, so to speak.
2001 - 6,214,737.11
This note is intended to confirm the items that were discussed at the said Metro
2000 - 8,003,180.38 North Region's Sales Managers meeting held at the 7/F Conference room last 18
October.
1999 - 6,797,814.05
xxxx
1998 - 4,805,166.34
Issue # 2: "Some Managers are unhappy with their earnings and would want to
1997 - 2,822,620.003 revert to the position of agents."

The problem started sometime in 2001, when Manulife instituted manpower This is an often repeated issue you have raised with me and with Kevin. For this
development programs in the regional sales management level. Relative thereto, reason, I placed the issue on the table before the rest of your Region's Sales
De Dios addressed a letter dated November 6, 20014 to Tongko regarding an Managers to verify its validity. As you must have noted, no Sales Manager came
October 18, 2001 Metro North Sales Managers Meeting. In the letter, De Dios forward on their own to confirm your statement and it took you to name Malou
stated: Samson as a source of the same, an allegation that Malou herself denied at our
meeting and in your very presence.
The first step to transforming Manulife into a big league player has been very
clear - to increase the number of agents to at least 1,000 strong for a start. This This only confirms, Greg, that those prior comments have no solid basis at all. I
may seem diametrically opposed to the way Manulife was run when you first now believe what I had thought all along, that these allegations were simply
joined the organization. Since then, however, substantial changes have taken meant to muddle the issues surrounding the inability of your Region to meet its
place in the organization, as these have been influenced by developments both agency development objectives!
from within and without the company. Issue # 3: "Sales Managers are doing what the company asks them to do but, in
xxxx the process, they earn less."

The issues around agent recruiting are central to the intended objectives hence xxxx
the need for a Senior Managers' meeting earlier last month when Kevin All the above notwithstanding, we had your own records checked and we found
O'Connor, SVP - Agency, took to the floor to determine from our senior agency that you made a lot more money in the Year 2000 versus 1999. In addition, you
leaders what more could be done to bolster manpower development. At earlier also volunteered the information to Kevin when you said that you probably will
meetings, Kevin had presented information where evidently, your Region was make more money in the Year 2001 compared to Year 2000. Obviously, your
the lowest performer (on a per Manager basis) in terms of recruiting in 2000 and, above statement about making "less money" did not refer to you but the way you
as of today, continues to remain one of the laggards in this area. argued this point had us almost believing that you were spouting the gospel of
While discussions, in general, were positive other than for certain comments truth when you were not. x x x
from your end which were perceived to be uncalled for, it became clear that a xxxx
one-on-one meeting with you was necessary to ensure that you and management,
were on the same plane. As gleaned from some of your previous comments in All of a sudden, Greg, I have become much more worried about your ability to
prior meetings (both in group and one-on-one), it was not clear that we were lead this group towards the new direction that we have been discussing these
proceeding in the same direction. past few weeks, i.e., Manulife's goal to become a major agency-led distribution
company in the Philippines. While as you claim, you have not stopped anyone
Kevin held subsequent series of meetings with you as a result, one of which I from recruiting, I have never heard you proactively push for greater agency
joined briefly. In those subsequent meetings you reiterated certain views, the recruiting. You have not been proactive all these years when it comes to agency
validity of which we challenged and subsequently found as having no basis. growth.
With such views coming from you, I was a bit concerned that the rest of the xxxx
Metro North Managers may be a bit confused as to the directions the company
BAUTISTA, Coleen Joyce Q. Page 30 of 58
I cannot afford to see a major region fail to deliver on its developmental goals Therefrom, Tongko filed a Complaint dated November 25, 2002 with the NLRC
next year and so, we are making the following changes in the interim: against Manulife for illegal dismissal. The case, docketed as NLRC NCR Case
No. 11-10330-02, was raffled to Labor Arbiter Marita V. Padolina.
1. You will hire at your expense a competent assistant who can unload you of
much of the routine tasks which can be easily delegated. This assistant should be In the Complaint, Tongko, in a bid to establish an employer-employee
so chosen as to complement your skills and help you in the areas where you feel relationship, alleged that De Dios gave him specific directives on how to manage
"may not be your cup of tea". his area of responsibility in the latter's letter dated November 6, 2001. He further
claimed that Manulife exercised control over him as follows:
You have stated, if not implied, that your work as Regional Manager may be too
taxing for you and for your health. The above could solve this problem. Such control was certainly exercised by respondents over the herein
complainant. It was Manulife who hired, promoted and gave various
xxxx assignments to him. It was the company who set objectives as regards
productions, recruitment, training programs and all activities pertaining to its
2. Effective immediately, Kevin and the rest of the Agency Operations will deal
business. Manulife prescribed a Code of Conduct which would govern in minute
with the North Star Branch (NSB) in autonomous fashion. x x x
detail all aspects of the work to be undertaken by employees, including the sales
I have decided to make this change so as to reduce your span of control and process, the underwriting process, signatures, handling of money, policyholder
allow you to concentrate more fully on overseeing the remaining groups under service, confidentiality, legal and regulatory requirements and grounds for
Metro North, your Central Unit and the rest of the Sales Managers in Metro termination of employment. The letter of Mr. De Dios dated 06 November 2001
North. I will hold you solely responsible for meeting the objectives of these left no doubt as to who was in control. The subsequent termination letter dated
remaining groups. 18 December 2001 again established in no uncertain terms the authority of the
herein respondents to control the employees of Manulife. Plainly, the
xxxx respondents wielded control not only as to the ends to be achieved but the ways
and means of attaining such ends.6
The above changes can end at this point and they need not go any further. This,
however, is entirely dependent upon you. But you have to understand that Tongko bolstered his argument by citing Insular Life Assurance Co., Ltd. v.
meeting corporate objectives by everyone is primary and will not be NLRC (4th Division)7 and Great Pacific Life Assurance Corporation v. NLRC,
compromised. We are meeting tough challenges next year and I would want 8 which Tongko claimed to be similar to the instant case.
everybody on board. Any resistance or holding back by anyone will be dealt
with accordingly. Tongko further claimed that his dismissal was without basis and that he was not
afforded due process. He also cited the Manulife Code of Conduct by which his
Subsequently, De Dios wrote Tongko another letter dated December 18, actions were controlled by the company.
2001,5 terminating Tongko's services, thus:
Manulife then filed a Position Paper with Motion to Dismiss dated February 27,
It would appear, however, that despite the series of meetings and 2003,9 in which it alleged that Tongko is not its employee, and that it did not
communications, both one-on-one meetings between yourself and SVP Kevin exercise "control" over him. Thus, Manulife claimed that the NLRC has no
O'Connor, some of them with me, as well as group meetings with your Sales jurisdiction over the case.
Managers, all these efforts have failed in helping you align your directions with
Management's avowed agency growth policy. In a Decision dated April 15, 2004, Labor Arbiter Marita V. Padolina dismissed
the complaint for lack of an employer-employee relationship. Padolina found
xxxx that applying the four-fold test in determining the existence of an employer-
employee relationship, none was found in the instant case. The dispositive
On account thereof, Management is exercising its prerogative under Section 14 portion thereof states:
of your Agents Contract as we are now issuing this notice of termination of your
Agency Agreement with us effective fifteen days from the date of this letter. WHEREFORE, premises considered, judgment is hereby rendered
DISMISSING the instant complaint for lack of jurisdiction, there being no
employer-employee relationship between the parties.

BAUTISTA, Coleen Joyce Q. Page 31 of 58


SO ORDERED. xxxx
Tongko appealed the arbiter's Decision to the NLRC which reversed the same All other claims are hereby dismissed for utter lack of merit.
and rendered a Decision dated September 27, 2004 finding Tongko to have been
illegally dismissed. From this Decision, Manulife filed a motion for reconsideration which was
denied by the NLRC First Division in a Resolution dated December 16, 2004.12
The NLRC's First Division, while finding an employer-employee relationship
between Manulife and Tongko applying the four-fold test, held Manulife liable Thus, Manulife filed an appeal with the CA docketed as CA-G.R. SP No. 88253.
for illegal dismissal. It further stated that Manulife exercised control over Thereafter, the CA issued the assailed Decision dated March 29, 2005, finding
Tongko as evidenced by the letter dated November 6, 2001 of De Dios and the absence of an employer-employee relationship between the parties and
wrote: deeming the NLRC with no jurisdiction over the case. The CA arrived at this
conclusion while again applying the four-fold test. The CA found that Manulife
The above-mentioned letter shows the extent to which respondents controlled did not exercise control over Tongko that would render the latter an employee of
complainant's manner and means of doing his work and achieving the goals set Manulife. The dispositive portion reads:
by respondents. The letter shows how respondents concerned themselves with
the manner complainant managed the Metro North Region as Regional Sales WHEREFORE, premises considered, the present petition is hereby GRANTED
Manager, to the point that respondents even had a say on how complainant and the writ prayed for accordingly GRANTED. The assailed Decision dated
interacted with other individuals in the Metro North Region. The letter is in fact September 27, 2004 and Resolution dated December 16, 2004 of the National
replete with comments and criticisms on how complainant carried out his Labor Relations Commission in NLRC NCR Case No. 00-11-10330-2002
functions as Regional Sales Manager. (NLRC NCR CA No. 040220-04) are hereby ANNULLED and SET ASIDE. The
Decision dated April 15, 2004 of Labor Arbiter Marita V. Padolina is hereby
More importantly, the letter contains an abundance of directives or orders that REINSTATED.
are intended to directly affect complainant's authority and manner of carrying
out his functions as Regional Sales Manager.10 x x x Hence, Tongko filed this petition and presented the following issues:

Additionally, the First Division also ruled that: A

Further evidence of [respondents'] control over complainant can be found in the The Court of Appeals committed grave abuse of discretion in granting
records of the case. [These] are the different codes of conduct such as the Agent respondents' petition for certiorari.
Code of Conduct, the Manulife Financial Code of Conduct, and the Manulife B
Financial Code of Conduct Agreement, which serve as the foundations of the
power of control wielded by respondents over complainant that is further The Court of Appeals committed grave abuse of discretion in annulling and
manifested in the different administrative and other tasks that he is required to setting aside the Decision dated September 27, 2004 and Resolution dated
perform. These codes of conduct corroborate and reinforce the display of December 16, 2004 in finding that there is no employer-employee relationship
respondents' power of control in their 06 November 2001 Letter to complainant. between petitioner and respondent.
11
C
The fallo of the September 27, 2004 Decision reads:
The Court of Appeals committed grave abuse of discretion in annulling and
WHEREFORE, premises considered, the appealed Decision is hereby reversed setting aside the Decision dated September 27, 2004 and Resolution dated
and set aside. We find complainant to be a regular employee of respondent December 16, 2004 which found petitioner to have been illegally dismissed and
Manulife and that he was illegally dismissed from employment by respondents. ordered his reinstatement with payment of backwages.13
In lieu of reinstatement, respondent Manulife is hereby ordered to pay Restated, the issues are: (1) Was there an employer-employee relationship
complainant separation pay as above set forth. Respondent Manulife is further between Manulife and Tongko? and (2) If yes, was Manulife guilty of illegal
ordered to pay complainant backwages from the time he was dismissed on 02 dismissal?
January 2002 up to the finality of this decision also as indicated above.
The Court's Ruling
BAUTISTA, Coleen Joyce Q. Page 32 of 58
This petition is meritorious. This assistant should be hired immediately.
Tongko Was An Employee of Manulife 2. Effective immediately, Kevin and the rest of the Agency Operations will deal
with the North Star Branch (NSB) in autonomous fashion x x x.
The basic issue of whether or not the NLRC has jurisdiction over the case
resolves itself into the question of whether an employer-employee relationship xxxx
existed between Manulife and Tongko. If no employer-employee relationship
existed between the two parties, then jurisdiction over the case properly lies with I have decided to make this change so as to reduce your span of control and
the Regional Trial Court. allow you to concentrate more fully on overseeing the remaining groups under
Metro North, your Central Unit and the rest of the Sales Managers in Metro
In the determination of whether an employer-employee relationship exists North. x x x
between two parties, this Court applies the four-fold test to determine the
existence of the elements of such relationship. In Pacific Consultants 3. Any resistance or holding back by anyone will be dealt with accordingly.
International Asia, Inc. v. Schonfeld, the Court set out the elements of an 4. I have been straightforward in this my letter and I know that we can continue
employer-employee relationship, thus: to work together… but it will have to be on my terms. Anything else is
Jurisprudence is firmly settled that whenever the existence of an employment unacceptable!
relationship is in dispute, four elements constitute the reliable yardstick: (a) the The NLRC further ruled that the different codes of conduct that were applicable
selection and engagement of the employee; (b) the payment of wages; (c) the to Tongko served as the foundations of the power of control wielded by Manulife
power of dismissal; and (d) the employer's power to control the employee's over Tongko that is further manifested in the different administrative and other
conduct. It is the so-called "control test" which constitutes the most important tasks that he was required to perform.
index of the existence of the employer-employee relationship that is, whether the
employer controls or has reserved the right to control the employee not only as The NLRC also found that Tongko was required to render exclusive service to
to the result of the work to be done but also as to the means and methods by Manulife, further bolstering the existence of an employer-employee relationship.
which the same is to be accomplished. Stated otherwise, an employer-employee
relationship exists where the person for whom the services are performed Finally, the NLRC ruled that Tongko was integrated into a management structure
reserves the right to control not only the end to be achieved but also the means to over which Manulife exercised control, including the actions of its officers. The
be used in reaching such end.14 NLRC held that such integration added to the fact that Tongko did not have his
own agency belied Manulife's claim that Tongko was an independent contractor.
The NLRC, for its part, applied the four-fold test and found the existence of all
the elements and declared Tongko an employee of Manulife. The CA, on the The CA, however, considered the finding of the existence of an employer-
other hand, found that the element of control as an indicator of the existence of employee relationship by the NLRC as far too sweeping having as its only basis
an employer-employee relationship was lacking in this case. The NLRC and the the letter dated November 6, 2001 of De Dios. The CA did not concur with the
CA based their rulings on the same findings of fact but differed in their NLRC's ruling that the elements of control as pointed out by the NLRC are
interpretations. "sufficient indicia of control that negates independent contractorship and
conclusively establish an employer-employee relationship between"15 Tongko
The NLRC arrived at its conclusion, first, on the basis of the letter dated and Manulife. The CA ruled that there is no employer-employee relationship
November 6, 2001 addressed by De Dios to Tongko. According to the NLRC, between Tongko and Manulife.
the letter contained "an abundance of directives or orders that are intended to
directly affect complainant's authority and manner of carrying out his functions An impasse appears to have been reached between the CA and the NLRC on the
as Regional Sales Manager." It enumerated these "directives" or "orders" as sole issue of control over an employee's conduct. It bears clarifying that such
follows: control not only applies to the work or goal to be done but also to the means and
methods to accomplish it.16 In Sonza v. ABS-CBN Broadcasting Corporation, we
1. You will hire at your expense a competent assistant who can unload you of explained that not all forms of control would establish an employer-employee
much of the routine tasks which can be easily delegated. x x x relationship, to wit:
xxxx

BAUTISTA, Coleen Joyce Q. Page 33 of 58


Further, not every form of control that a party reserves to himself over the There is no conflict between our rulings in Insular and in Great Pacific Life
conduct of the other party in relation to the services being rendered may be Assurance Corporation. We said in the latter case:
accorded the effect of establishing an employer-employee relationship. The facts
of this case fall squarely with the case of Insular Life Assurance Co., Ltd. vs. [I]t cannot be gain said that Grepalife had control over private respondents'
NLRC. In said case, we held that: performance as well as the result of their efforts. A cursory reading of their
respective functions as enumerated in their contracts reveals that the
Logically, the line should be drawn between rules that merely serve as company practically dictates the manner by which their jobs are to be
guidelines towards the achievement of the mutually desired result without carried out. For instance, the District Manager must properly account, record
dictating the means or methods to be employed in attaining it, and those and document the company's funds spot-check and audit the work of the zone
that control or fix the methodology and bind or restrict the party hired to supervisors, conserve the company's business in the district through
the use of such means. The first, which aim only to promote the result, ‘reinstatements', follow up the submission of weekly remittance reports of the
create no employer-employee relationship unlike the second, which address debit agents and zone supervisors, preserve company property in good condition,
both the result and the means used to achieve it.17 (Emphasis supplied.) train understudies for the position of district manager, and maintain his quota of
sales (the failure of which is a ground for termination). On the other hand, a zone
We ruled in Insular Life Assurance Co., Ltd. v. NLRC (Insular) that: supervisor must direct and supervise the sales activities of the debit agents under
him, conserve company property through "reinstatements", undertake and
It is, therefore, usual and expected for an insurance company to promulgate a set
discharge the functions of absentee debit agents, spot-check the records of debit
of rules to guide its commission agents in selling its policies that they may not
agents, and insure proper documentation of sales and collections by the debit
run afoul of the law and what it requires or prohibits. Of such a character are the
agents.20 (Emphasis supplied.)
rules which prescribe the qualifications of persons who may be insured, subject
insurance applications to processing and approval by the Company, and also Based on the foregoing cases, if the specific rules and regulations that are
reserve to the Company the determination of the premiums to be paid and the enforced against insurance agents or managers are such that would directly
schedules of payment. None of these really invades the agent's contractual affect the means and methods by which such agents or managers would achieve
prerogative to adopt his own selling methods or to sell insurance at his own time the objectives set by the insurance company, they are employees of the insurance
and convenience, hence cannot justifiably be said to establish an employer- company.
employee relationship between him and the company.18
In the instant case, Manulife had the power of control over Tongko that would
Hence, we ruled in Insular that no employer-employee relationship existed make him its employee. Several factors contribute to this conclusion.
therein. However, such ruling was tempered with the qualification that had there
been evidence that the company promulgated rules or regulations that effectively In the Agreement dated July 1, 1977 executed between Tongko and Manulife, it
controlled or restricted an insurance agent's choice of methods or the methods is provided that:
themselves in selling insurance, an employer-employee relationship would have
existed. In other words, the Court in Insular in no way definitively held that The Agent hereby agrees to comply with all regulations and requirements of the
insurance agents are not employees of insurance companies, but rather made the Company as herein provided as well as maintain a standard of knowledge and
same a case-to-case basis. We held: competency in the sale of the Company's products which satisfies those set by
the Company and sufficiently meets the volume of new business required of
The respondents limit themselves to pointing out that Basiao's contract with the Production Club membership.21
Company bound him to observe and conform to such rules and regulations as the
latter might from time to time prescribe. No showing has been made that any Under this provision, an agent of Manulife must comply with three (3)
such rules or regulations were in fact promulgated, much less that any rules requirements: (1) compliance with the regulations and requirements of the
existed or were issued which effectively controlled or restricted his choice of company; (2) maintenance of a level of knowledge of the company's products
methods or the methods themselves of selling insurance. Absent such that is satisfactory to the company; and (3) compliance with a quota of new
showing, the Court will not speculate that any exceptions or qualifications businesses.
were imposed on the express provision of the contract leaving Basiao "... Among the company regulations of Manulife are the different codes of conduct
free to exercise his own judgment as to the time, place and means of such as the Agent Code of Conduct, Manulife Financial Code of Conduct, and
soliciting insurance."19 (Emphasis supplied.) Manulife Financial Code of Conduct Agreement, which demonstrate the power
BAUTISTA, Coleen Joyce Q. Page 34 of 58
of control exercised by the company over Tongko. The fact that Tongko was d. Achieve agreed production objectives in terms of Net Annualized
obliged to obey and comply with the codes of conduct was not disowned by Commissions and Case Count and recruitment goals; and
respondents.
e. Sell the various products of Manulife to my personal clients.
Thus, with the company regulations and requirements alone, the fact that Tongko
was an employee of Manulife may already be established. Certainly, these While Ma. Lourdes Samson, a Unit Manager of Manulife, stated in her Affidavit
requirements controlled the means and methods by which Tongko was to achieve dated April 28, 200324that:
the company's goals. 3. In 1977, I was assigned as a Unit Manager ("UM") of North Peaks Unit, North
More importantly, Manulife's evidence establishes the fact that Tongko was Star Branch, Metro North Region;
tasked to perform administrative duties that establishes his employment with 4. As such UM, I render the following services:
Manulife.
a. To render or recommend prospective agents to be licensed, trained and
In its Comment (Re: Petition for Review dated 15 April 2005) dated August 5, contracted to sell Manulife products and who will be part of my Unit;
2005, Manulife attached affidavits of its agents purportedly to support its claim
that Tongko, as a Regional Sales Manager, did not perform any administrative b. To coordinate activities of the agents under my Unit in their daily, weekly and
functions. An examination of these affidavits would, however, prove the monthly selling activities, making sure that their respective sales targets are met;
opposite.
c. To conduct periodic training sessions for my agents to further enhance their
In an Affidavit dated April 28, 2003,22 John D. Chua, a Regional Sales Manager sales skills.
of Manulife, stated:
d. To assist my agents with their sales activities by way of joint fieldwork,
4. On September 1, 1996, my services were engaged by Manulife as an Agency consultations and one-on- one evaluation and analysis of particular accounts.
Regional Sales Manager ("RSM") for Metro South Region pursuant to an
Agency Contract. As such RSM, I have the following functions: e. To provide opportunities to motivate my agents to succeed like conducting
promos to increase sales activities and encouraging them to be involved in
1. Refer and recommend prospective agents to Manulife company and industry activities.
2. Coach agents to become productive f. To provide opportunities for professional growth to my agents by encouraging
them to be a member of the LUCAP (Life Underwriters Association of the
3. Regularly meet with, and coordinate activities of agents affiliated to my Philippines).
region.
A comparison of the above functions and those contained in the Agreement with
While Amada Toledo, a Branch Manager of Manulife, stated in her Affidavit those cited in Great Pacific Life Assurance Corporation25 reveals a striking
dated April 29, 200323that: similarity that would more than support a similar finding as in that case. Thus,
3. In January 1997, I was assigned as a Branch Manager ("BM") of Manulife for there was an employer-employee relationship between the parties.
the Metro North Sector; Additionally, it must be pointed out that the fact that Tongko was tasked with
4. As such BM, I render the following services: recruiting a certain number of agents, in addition to his other administrative
functions, leads to no other conclusion that he was an employee of Manulife.
a. Refer and recommend prospective agents to Manulife;
In his letter dated November 6, 2001, De Dios harped on the direction of
b. Train and coordinate activities of other commission agents; Manulife of becoming a major agency-led distribution company whereby greater
agency recruitment is required of the managers, including Tongko. De Dios
c. Coordinate activities of Agency Managers who, in turn, train and coordinate made it clear that agent recruitment has become the primary means by which
activites of other commission agents; Manulife intends to sell more policies. More importantly, it is Tongko's alleged
failure to follow this principle of recruitment that led to the termination of his

BAUTISTA, Coleen Joyce Q. Page 35 of 58


employment with Manulife. With this, it is inescapable that Tongko was an the employer. Failure to discharge this evidential burden would necessarily mean
employee of Manulife. that the dismissal was not justified, and, therefore, illegal.27
Tongko Was Illegally Dismissed We again ruled in Times Transportation Co., Inc. v. National Labor Relations
Commission that:
In its Petition for Certiorari dated January 7, 200526 filed before the CA,
Manulife argued that even if Tongko is considered as its employee, his The law mandates that the burden of proving the validity of the termination of
employment was validly terminated on the ground of gross and habitual neglect employment rests with the employer. Failure to discharge this evidentiary burden
of duties, inefficiency, as well as willful disobedience of the lawful orders of would necessarily mean that the dismissal was not justified, and, therefore,
Manulife. Manulife stated: illegal. Unsubstantiated suspicions, accusations and conclusions of employers do
not provide for legal justification for dismissing employees. In case of doubt,
In the instant case, private respondent, despite the written reminder from Mr. De such cases should be resolved in favor of labor, pursuant to the social justice
Dios refused to shape up and altogether disregarded the latter's advice resulting policy of our labor laws and Constitution.28
in his laggard performance clearly indicative of his willful disobedience of the
lawful orders of his superior. x x x This burden of proof was clarified in Community Rural Bank of San Isidro
(N.E.), Inc. v. Paez to mean substantial evidence, to wit:
xxxx
The Labor Code provides that an employer may terminate the services of an
As private respondent has patently failed to perform a very fundamental duty, employee for just cause and this must be supported by substantial evidence. The
and that is to yield obedience to all reasonable rules, orders and instructions of settled rule in administrative and quasi-judicial proceedings is that proof beyond
the Company, as well as gross failure to reach at least minimum quota, the reasonable doubt is not required in determining the legality of an employer's
termination of his engagement from Manulife is highly warranted and therefore, dismissal of an employee, and not even a preponderance of evidence is
there is no illegal dismissal to speak of. necessary as substantial evidence is considered sufficient. Substantial evidence is
more than a mere scintilla of evidence or relevant evidence as a reasonable mind
It is readily evident from the above-quoted portions of Manulife's petition that it
might accept as adequate to support a conclusion, even if other minds, equally
failed to cite a single iota of evidence to support its claims. Manulife did not
reasonable, might conceivably opine otherwise.29
even point out which order or rule that Tongko disobeyed. More importantly,
Manulife did not point out the specific acts that Tongko was guilty of that would Here, Manulife failed to overcome such burden of proof. It must be reiterated
constitute gross and habitual neglect of duty or disobedience. Manulife merely that Manulife even failed to identify the specific acts by which Tongko's
cited Tongko's alleged "laggard performance," without substantiating such claim, employment was terminated much less support the same with substantial
and equated the same to disobedience and neglect of duty. evidence. To repeat, mere conjectures cannot work to deprive employees of their
means of livelihood. Thus, it must be concluded that Tongko was illegally
We cannot, therefore, accept Manulife's position.
dismissed.
In Quebec, Sr. v. National Labor Relations Commission, we ruled that:
Moreover, as to Manulife's failure to comply with the twin notice rule, it reasons
When there is no showing of a clear, valid and legal cause for the termination of that Tongko not being its employee is not entitled to such notices. Since we have
employment, the law considers the matter a case of illegal dismissal and the ruled that Tongko is its employee, however, Manulife clearly failed to afford
burden is on the employer to prove that the termination was for a valid or Tongko said notices. Thus, on this ground too, Manulife is guilty of illegal
authorized cause. This burden of proof appropriately lies on the shoulders of the dismissal. In Quebec, Sr., we also stated:
employer and not on the employee because a worker's job has some of the
Furthermore, not only does our legal system dictate that the reasons for
characteristics of property rights and is therefore within the constitutional mantle
dismissing a worker must be pertinently substantiated, it also mandates that the
of protection. No person shall be deprived of life, liberty or property without due
manner of dismissal must be properly done, otherwise, the termination itself is
process of law, nor shall any person be denied the equal protection of the laws.
gravely defective and may be declared unlawful.30
Apropos thereto, Art. 277, par. (b), of the Labor Code mandates in explicit terms
For breach of the due process requirements, Manulife is liable to Tongko in the
that the burden of proving the validity of the termination of employment rests on
amount of PhP 30,000 as indemnity in the form of nominal damages.31

BAUTISTA, Coleen Joyce Q. Page 36 of 58


Finally, Manulife raises the issue of the correctness of the computation of the WHEREFORE, the petition is hereby GRANTED. The assailed March 29,
award to Tongko made by the NLRC by claiming that Songco v. National Labor 2005 Decision of the CA in CA-G.R. SP No. 88253 is REVERSED and SET
Relations Commission32 is inapplicable to the instant case, considering that ASIDE. The Decision dated September 27, 2004 of the NLRC
Songco was dismissed on the ground of retrenchment. is REINSTATED with the following modifications:
An examination of Songco reveals that it may be applied to the present case. In Manulife shall pay Tongko the following:
that case, Jose Songco was a salesman of F.E. Zuellig (M), Inc. which terminated
the services of Songco on the ground of retrenchment due to financial losses. (1) Full backwages, inclusive of allowances and other benefits or their monetary
The issue raised to the Court, however, was whether commissions are considered equivalent from January 2, 2002 up to the finality of this Decision;
as part of wages in order to determine separation pay. Thus, the fact that Songco (2) Separation pay of one (1) month salary for every year of service from 1977
was dismissed due to retrenchment does not hamper the application thereof to up to 2001 amounting to PhP 12,435,474.24;
the instant case. What is pivotal is that we ruled in Songco that commissions are
part of wages for the determination of separation pay. (3) Nominal damages of PhP 30,000 as indemnity for violation of the due
process requirements; and
Article 279 of the Labor Code on security of tenure pertinently provides that:
(4) Attorney's fees equivalent to ten percent (10%) of the aforementioned
In cases of regular employment the employer shall not terminate the services of backwages and separation pay.
an employee except for a just cause or when authorized by this Title. An
employee who is unjustly dismissed from work shall be entitled to reinstatement Costs against respondent Manulife.
without loss of seniority rights and other privileges and to his full backwages,
inclusive of allowances, and to his other benefits or their monetary equivalent
computed from the time his compensation was withheld from him up to the time
of his actual reinstatement. TAPE vs. Servana

In Triad Security & Allied Services, Inc. v. Ortega, Jr. (Triad), we thus stated that Servaña started out as a security for the Agro-Commercial Security Agency
an illegally dismissed employee shall be entitled to backwages and separation (ACSA) since 1987. The agency had a contract with TV network RPN 9.
pay, if reinstatement is no longer viable: On the other hand, Television and Production Exponents, Inc (TAPE). is a
As the law now stands, an illegally dismissed employee is entitled to two reliefs, company in charge of TV programming and was handling shows like Eat
namely: backwages and reinstatement. These are separate and distinct from each Bulaga! Eat Bulaga! was then with RPN 9.
other. However, separation pay is granted where reinstatement is no longer In 1995, RPN 9 severed its relations with ACSA. TAPE retained the services of
feasible because of strained relations between the employee and the employer. In Servaña as a security guard and absorbed him.
effect, an illegally dismissed employee is entitled to either reinstatement, if
viable, or separation pay if reinstatement is no longer viable and backwages.33 In 2000, TAPE contracted the services of Sun Shield Security Agency. It then
notified Servaña that he is being terminated because he is now a redundant
Taking into consideration the cases of Songco and Triad, we find correct the employee.
computation of the NLRC that the monthly gross wage of Tongko in 2001 was
PhP 518,144.76. For having been illegally dismissed, Tongko is entitled to Servaña then filed a case for illegal Dismissal. The Labor Arbiter ruled that
reinstatement with full backwages under Art. 279 of the Labor Code. Due to the Servaña’s dismissal is valid on the ground of redundancy but though he was not
strained relationship between Manulife and Tongko, reinstatement, however, is illegally dismissed he is still entitled to be paid a separation pay which is
no longer advisable. Thus, Tongko will be entitled to backwages from January 2, amounting to one month pay for every year of service which totals to
2002 (date of dismissal) up to the finality of this decision. Moreover, Manulife P78,000.00.
will pay Tongko separation pay of one (1) month salary for every year of service
that is from 1977 to 2001 amounting to PhP 12,435,474.24, considering that TAPE appealed and argued that Servaña is not entitled to receive separation pay
reinstatement is not feasible. Tongko shall also be entitled to an award of for he is considered as a talent and not as a regular employee; that as such, there
attorney's fees in the amount of ten percent (10%) of the aggregate amount of the is no employee-employer relationship between TAPE and Servaña. The National
above awards.
BAUTISTA, Coleen Joyce Q. Page 37 of 58
Labor Relations Commission ruled in favor of TAPE. It ruled that Servaña is a Regular Employee Defined: One having been engaged to perform an activity
program employee. Servaña appealed before the Court of Appeals. that is necessary and desirable to a company’s business.
The Court of Appeals reversed the NLRC and affirmed the LA. The CA further
ruled that TAPE and its president Tuviera should pay for nominal damages
amounting to P10,000.00. ENCYCLOPEDIA BRITANNICA (Philippines), INC. vs. NLRC

ISSUE: Whether or not there is an employee-employer relationship existing 264 SCRA 4


between TAPE and Servaña. Facts: Limjoco was a Sales Divison of Encyclopaedia Britannica and was in
HELD: Yes. Servaña is a regular employee. charge of selling the products through some sales representatives. As
compensation, he would receive commissions from the products sold by his
In determining Servaña’s nature of employment, the Supreme Court employed agents. He was also allowed to use the petitioner’s name, goodwill and logo. It
the Four Fold Test: was agreed that office expenses would be deducted from Limjoco’s
commissions.
1. Whether or not employer conducted the selection and engagement of the
employee. In 1974, Limjoco resigned to pursue his private business and filed a complaint
against petitioner for alleged non-payment of separation pay and other benefits
Servaña was selected and engaged by TAPE when he was absorbed as a “talent” and also illegal deduction from sales commissions. Petitioner alleged that
in 1995. He is not really a talent, as termed by TAPE, because he performs an Limjoco was not an employee of the company but an independent dealer
activity which is necessary and desirable to TAPE’s business and that is being a authorized to promote and sell its products and in return, received commissions
security guard. Further, the primary evidence of him being engaged as an therein. Petitioner also claims that it had no control and supervision over the
employee is his employee identification card. An identification card is usually complainant as to the manners and means he conducted his business operations.
provided not just as a security measure but to mainly identify the holder thereof Limjoco maintained otherwise. He alleged he was hired by the petitioner and
as a bona fide employee of the firm who issues it. was assigned in the sales department.
2. Whether or not there is payment of wages to the employee by the The Labor Arbiter ruled that Limjoco was an employee of the company. NLRC
employer. also affirmed the decision and opined that there was no evidence supporting
allegation that Limjoco was an independent contractor or dealer.
Servaña is definitely receiving a fixed amount as monthly compensation. He’s
receiving P6,000.00 a month. Issue: Whether or not there was an employee-employer relationship between the
parties.
3. Whether or not employer has the power to dismiss employee.
Ruling: There was no employee-employer relationship. In determining the
The Memorandum of Discontinuance issued to Servaña to notify him that he is a
relationship, the following elements must be present: selection and engagement
redundant employee evidenced TAPE’s power to dismiss Servaña.
of the employee, payment of wages, power of dismissal and power to control the
4. Whether or not the employer has the power of control over the employee. employee’s conduct. The power of control is commonly regarded as the most
crucial and determinative indicator of the presence or absence of an employee-
The bundy cards which showed that Servaña was required to report to work at employer relationship. Under the control test, an employee-employer
fixed hours of the day manifested the fact that TAPE does have control over him. relationship exists where the person for whom the services are performed
Otherwise, Servaña could have reported at any time during the day as he may reserves a right to control not only the end to be achieved, but also the manner
wish. and means to be employed in reaching that end.
Therefore, Servaña is entitled to receive a separation pay. The issuance of guidelines by the petitioner was merely guidelines on company
policies which sales managers follow and impose on their respective agents.
On the other hand, the Supreme Court ruled that Tuviera, as president of TAPE, Limjoco was not an employee of the company since he had the free rein in the
should not be held liable for nominal damages as there was no showing he acted means and methods for conducting the marketing operations. He was merely an
in bad faith in terminating Servaña.
BAUTISTA, Coleen Joyce Q. Page 38 of 58
agent or an independent dealer of the petitioner. He was free to conduct his work employee relationship exists where the person for whom the services
and he was free to engage in other means of livelihood. are performed reserves the right to control not only the end achieved,
but also the manner and means to be used in reaching that end.
In ascertaining the employee-employer relationship, the factual circumstances
must be considered. The element of control is absent where a person who works • Applying the aforementioned test, an employer-employee relationship
for another does so more or less at his own pleasure and is not subject to definite is apparently absent in the case at bar. Among other things, respondent
hours or conditions of work, and in turn is compensated in according to the was not required to report everyday during regular office hours of
result of his efforts and not the amount thereof. Hence, there was no employee- petitioner. Respondent’s monthly retainer fees were paid to him either
employer relationship. at his residence or a local restaurant. More importantly, petitioner did
not prescribe the manner in which respondent would accomplish any of
the tasks in which his expertise as a liaison officer was needed;
respondent was left alone and given the freedom to accomplish the
Atok Big-Wedge Company Inc vs Gison
tasks using his own means and methods. Respondent was assigned
GR No.169510 tasks to perform, but petitioner did not control the manner and methods
by which respondent performed these tasks. The absence of the element
Facts: of control on the part of the petitioner engenders a conclusion that he is
not an employee of the petitioner.
• Jesus P. Gison was engaged as part-time consultant on retainer basis by
the petitioner Atok. Petitioner did not require respondent to its office on
a regular basis, except when occasionally requested by the management
to discuss matters needing his expertise as a consultant. As payment for
his services, respondent received a retainer fee of P3,000.00 which was
delivered to him at his residence or in a local restaurant. The said
arrangement continued for the next eleven years.
• Since the respondent was getting old he requested that petitioner cause Dumpit Murillo vs. CA
his registration with the SSS but petitioner did not accede his request.
Thelma Dumpit-Murillo was hired by ABC as a newscaster in 1995. Her
• Respondent filed a complaint with the SSS against petitioner for the contract with the TV station was repeatedly renewed until 1999. She then wrote
latter’s refusal to cause his registration with the SSS. On the same date Jose Javier (VP for News and Public Affairs of ABC) advising him of her
the petitioner issued a memo advising the termination of the intention to renew the contract.
respondent’s retainer contract. Thus he filed for illegal dismissal.
Javier did not respond.
Issue:
Dumpit then demanded reinstatement as well as her backwages, service
• Whether employer-employee relationship exists? incentive leave pays and other monetary benefits.
Held: ABC said they could only pay her backwages but her other claims had no basis
as she was not entitled thereto because she is considered as a talent and not a
• No. To ascertain the existence of an employer-employee relationship
regular employee.
jurisprudence has invariably adhered to the four-fold test to wit: (1) the
selection and engagement of the employee; (2) the payment of wages; Dumpit sued ABC. The Labor Arbiter ruled against Dumpit. The National Labor
(3) the power of dismissal; and (4) the power to control the employee’s Relations Commission reversed the LA. The Court of Appeals reversed the
conduct, or the so-called “control test”. NLRC and ruled that as per the contract between ABC and Dumpit, Dumpit is a
fixed term employee.
• The commonly so called control test is commonly regarded as the most
crucial and determinative indicator of the presence or absence of an ISSUE: Whether or not Dumpit is a regular employee.
employer-employee relationship. Under the control test, an employer-
BAUTISTA, Coleen Joyce Q. Page 39 of 58
HELD: Yes. Dumpit was a regular employee under contemplation of law. The period January 1, 2003 to July 15, 2003; and the second was for September 1 to
practice of having fixed-term contracts in the industry does not automatically December 2003. After the lapse of the latter period, PBA decided not to renew
make all talent contracts valid and compliant with labor law. The assertion that a their contracts.
talent contract exists does not necessarily prevent a regular employment status.
Complainants were not illegally dismissed because they were not employees of
The duties of Dumpit as enumerated in her employment contract indicate that the PBA. Their respective contracts of retainer were simply not renewed. PBA
ABC had control over the work of Dumpit. Aside from control, ABC also had the prerogative of whether or not to renew their contracts, which they knew
dictated the work assignments and payment of petitioner’s wages. ABC also had were fixed.4
power to dismiss her. All these being present, clearly, there existed an
employment relationship between Dumpit and ABC. In her 31 March 2005 Decision,5 the Labor Arbiter6 declared petitioner an
employee whose dismissal by respondents was illegal. Accordingly, the Labor
In addition, her work was continuous for a period of four years. This repeated Arbiter ordered the reinstatement of petitioner and the payment of backwages,
engagement under contract of hire is indicative of the necessity and desirability moral and exemplary damages and attorneys fees, to wit:
of the Dumpit’s work in ABC’s business
WHEREFORE, premises considered all respondents who are here found to have
Bernarte v PBA illegally dismissed complainants are hereby ordered to (a) reinstate complainants
within thirty (30) days from the date of receipt of this decision and

 to solidarily pay complainants:
The facts, as summarized by the NLRC and quoted by the Court of Appeals, are
as follows:
Complainants (Jose Mel Bernarte and Renato Guevarra) aver that they were
  JOSE MEL RENATO
invited to join the PBA as referees. During the leadership of Commissioner
Emilio Bernardino, they were made to sign contracts on a year-to-year basis. BERNARTE GUEVARRA
 
During the term of Commissioner Eala, however, changes were made on the    
terms of their employmen 1. backwages from January 1, 2004 up
to the finality of this Decision, which to    
Complainant Bernarte, for instance, was not made to sign a contract during the
date is
first conference of the All-Filipino Cup which was from February 23, 2003 to P536,250.00 P211,250.00
June 2003. It was only during the second conference when he was made to sign  
a one and a half month contract for the period July 1 to August 5, 2003. 100,000.00  
2. moral damages
On January 15, 2004, Bernarte received a letter from the Office of the 50,000.00 100,000.00
Commissioner advising him that his contract would not be renewed citing his  
unsatisfactory performance on and off the court. It was a total shock  
for Bernarte who was awarded Referee of the year in 2003. He felt that the 3. exemplary damages
dismissal was caused by his refusal to fix a game upon order of Ernie De Leon. 50,000.00

On the other hand, complainant Guevarra alleges that he was invited to join the 4. 10% attorneys fees 68,625.00 36,125.00
PBA pool of referees in February 2001. On March 1, 2001, he signed a contract
as trainee. Beginning 2002, he signed a yearly contract as Regular Class C      
referee. On May 6, 2003, respondent Martinez issued a memorandum TOTAL P754,875.00 P397,375.00
to Guevarra expressing dissatisfaction over his questioning on the assignment of
referees officiating out-of-town games. Beginning February 2004, he was no or a total of P1,152,250.00
longer made to sign a contract.
Respondents aver, on the other hand, that complainants entered into two
contracts of retainer with the PBA in the year 2003. The first contract was for the
BAUTISTA, Coleen Joyce Q. Page 40 of 58
The rest of the claims are hereby dismissed for lack of merit or basis. The Issues
SO ORDERED.7 The main issue in this case is whether petitioner is an employee of respondents,
which in turn determines whether petitioner was illegally dismissed.
In its 28 January 2008 Decision,8 the NLRC affirmed the Labor Arbiters
judgment. The dispositive portion of the NLRCs decision reads: Petitioner raises the procedural issue of whether the Labor Arbiters decision has
become final and executory for failure of respondents to appeal with the NLRC
WHEREFORE, the appeal is hereby DISMISSED. The Decision of Labor within the reglementary period.
Arbiter Teresita D. Castillon-Lora dated March 31, 2005 is AFFIRMED.
The Ruling of the Court
SO ORDERED.9
The petition is bereft of merit.
Respondents filed a petition for certiorari with the Court of Appeals, which
overturned the decisions of the NLRC and Labor Arbiter. The dispositive portion The Court shall first resolve the procedural issue posed by petitioner.
of the Court of Appeals decision reads:
Petitioner contends that the Labor Arbiters Decision of 31 March 2005 became
WHEREFORE, the petition is hereby GRANTED. The assailed Decision dated final and executory for failure of respondents to appeal with the NLRC within
January 28, 2008 and Resolution dated August 26, 2008 of the National Labor the prescribed period. Petitioner claims that the Labor Arbiters decision was
Relations Commission are ANNULLED and SET ASIDE. Private respondents constructively served on respondents as early as August 2005 while respondents
complaint before the Labor Arbiter is DISMISSED. appealed the Arbiters decision only on 31 March 2006, way beyond
the reglementary period to appeal. Petitioner points out that service of an
SO ORDERED.10 unclaimed registered mail is deemed complete five days from the date of first
notice of the post master. In this case three notices were issued by the post
The Court of Appeals Ruling
office, the last being on 1 August 2005. The unclaimed registered mail was
The Court of Appeals found petitioner an independent contractor since consequently returned to sender. Petitioner presents the Postmasters Certification
respondents did not exercise any form of control over the means and methods by to prove constructive service of the Labor Arbiters decision on respondents. The
which petitioner performed his work as a basketball referee. The Court of Postmaster certified:
Appeals held:
xxx
While the NLRC agreed that the PBA has no control over the referees acts of
That upon receipt of said registered mail matter, our registry in charge,
blowing the whistle and making calls during basketball games, it, nevertheless,
Vicente Asis, Jr., immediately issued the first registry notice to claim on July 12,
theorized that the said acts refer to the means and methods employed by the
2005 by the addressee. The second and third notices were issued on July 21 and
referees in officiating basketball games for the illogical reason that said acts
August 1, 2005, respectively.
refer only to the referees skills. How could a skilled referee perform his job
without blowing a whistle and making calls? Worse, how can the PBA control That the subject registered letter was returned to the sender (RTS) because the
the performance of work of a referee without controlling his acts of blowing the addressee failed to claim it after our one month retention period elapsed. Said
whistle and making calls? registered letter was dispatched from this office to Manila CPO (RTS) under bill
#6, line 7, page1, column 1, on September 8, 2005.12
Moreover, this Court disagrees with the Labor Arbiters finding (as affirmed by
the NLRC) that the Contracts of Retainer show that petitioners have control over Section 10, Rule 13 of the Rules of Court provides:
private respondents.
SEC. 10. Completeness of service. Personal service is complete upon actual
xxxx delivery. Service by ordinary mail is complete upon the expiration of ten (10)
days after mailing, unless the court otherwise provides. Service by registered
Neither do We agree with the NLRCs affirmance of the Labor Arbiters
mail is complete upon actual receipt by the addressee, or after five (5) days from
conclusion that private respondents repeated hiring made them regular
the date he received the first notice of the postmaster, whichever date is earlier.
employees by operation of law.11

BAUTISTA, Coleen Joyce Q. Page 41 of 58


The rule on service by registered mail contemplates two situations: (1) actual the employers power to control the employee on the means and methods by
service the completeness of which is determined upon receipt by the addressee which the work is accomplished. The so-called control test is the most
of the registered mail; and (2) constructive service the completeness of which is important indicator of the presence or absence of an employer-employee
determined upon expiration of five days from the date the addressee received the relationship.19
first notice of the postmaster.13
In this case, PBA admits repeatedly engaging petitioners services, as shown in
Insofar as constructive service is concerned, there must be conclusive proof that the retainer contracts. PBA pays petitioner a retainer fee, exclusive of per diem
a first notice was duly sent by the postmaster to the addressee.14 Not only is it or allowances, as stipulated in the retainer contract. PBA can terminate the
required that notice of the registered mail be issued but that it should also be retainer contract for petitioners violation of its terms and conditions.
delivered to and received by the addressee.15 Notably, the presumption that
official duty has been regularly performed is not applicable in this situation. It is However, respondents argue that the all-important element of control is lacking
incumbent upon a party who relies on constructive service to prove that the in this case, making petitioner an independent contractor and not an employee of
notice was sent to, and received by, the addressee.16 respondents.

The best evidence to prove that notice was sent would be a certification from the Petitioner contends otherwise. Petitioner asserts that he is an employee of
postmaster, who should certify not only that the notice was issued or sent but respondents since the latter exercise control over the performance of his work.
also as to how, when and to whom the delivery and receipt was made. The Petitioner cites the following stipulations in the retainer contract which evidence
mailman may also testify that the notice was actually delivered.17 control: (1) respondents classify or rate a referee; (2) respondents require
referees to attend all basketball games organized or authorized by the PBA, at
In this case, petitioner failed to present any concrete proof as to how, when and least one hour before the start of the first game of each day; (3) respondents
to whom the delivery and receipt of the three notices issued by the post office assign petitioner to officiate ballgames, or to act as alternate referee or
was made. There is no conclusive evidence showing that the post office notices substitute; (4) referee agrees to observe and comply with all the requirements of
were actually received by respondents, negating petitioners claim of constructive the PBA governing the conduct of the referees whether on or off the court; (5)
service of the Labor Arbiters decision on respondents. The Postmasters referee agrees (a) to keep himself in good physical, mental, and emotional
Certification does not sufficiently prove that the three notices were delivered to condition during the life of the contract; (b) to give always his best effort and
and received by respondents; it only indicates that the post office issued the three service, and loyalty to the PBA, and not to officiate as referee in any basketball
notices. Simply put, the issuance of the notices by the post office is not game outside of the PBA, without written prior consent of the Commissioner; (c)
equivalent to delivery to and receipt by the addressee of the registered mail. always to conduct himself on and off the court according to the highest standards
Thus, there is no proof of completed constructive service of the Labor Arbiters of honesty or morality; and (6) imposition of various sanctions for violation of
decision on respondents. the terms and conditions of the contract.
At any rate, the NLRC declared the issue on the finality of the Labor Arbiters The foregoing stipulations hardly demonstrate control over the means and
decision moot as respondents appeal was considered in the interest of substantial methods by which petitioner performs his work as a referee officiating a PBA
justice. We agree with the NLRC. The ends of justice will be better served if we basketball game. The contractual stipulations do not pertain to, much less
resolve the instant case on the merits rather than allowing the substantial issue of dictate, how and when petitioner will blow the whistle and make calls. On the
whether petitioner is an independent contractor or an employee linger and contrary, they merely serve as rules of conduct or guidelines in order to maintain
remain unsettled due to procedural technicalities. the integrity of the professional basketball league. As correctly observed by the
Court of Appeals, how could a skilled referee perform his job without blowing a
The existence of an employer-employee relationship is ultimately a question of whistle and making calls? x x x [H]ow can the PBA control the performance of
fact. As a general rule, factual issues are beyond the province of this Court. work of a referee without controlling his acts of blowing the whistle and making
However, this rule admits of exceptions, one of which is where there are calls?20
conflicting findings of fact between the Court of Appeals, on one hand, and the
NLRC and Labor Arbiter, on the other, such as in the present case.18 In Sonza v. ABS-CBN Broadcasting Corporation,21 which determined the
relationship between a television and radio station and one of its talents, the
To determine the existence of an employer-employee relationship, case law has Court held that not all rules imposed by the hiring party on the hired party
consistently applied the four-fold test, to wit: (a) the selection and engagement indicate that the latter is an employee of the former. The Court held:
of the employee; (b) the payment of wages; (c) the power of dismissal; and (d)
BAUTISTA, Coleen Joyce Q. Page 42 of 58
We find that these general rules are merely guidelines towards the achievement are required specifically for such position and cannot possibly be controlled by
of the mutually desired result, which are top-rating television and radio the hiring party
programs that comply with standards of the industry. We have ruled that:
In Yonan v. United States Soccer Federation, Inc.,23 the United States District
Further, not every form of control that a party reserves to himself over the Court of Illinois held that plaintiff, a soccer referee, is an independent contractor,
conduct of the other party in relation to the services being rendered may be and not an employee of defendant which is the statutory body that governs
accorded the effect of establishing an employer-employee relationship. The facts soccer in the United States. As such, plaintiff was not entitled to protection by
of this case fall squarely with the case of Insular Life Assurance Co., Ltd. v. the Age Discrimination in Employment Act. The U.S. District Court ruled:
NLRC. In said case, we held that:
Generally, if an employer has the right to control and direct the work of an
Logically, the line should be drawn between rules that merely serve as guidelines individual, not only as to the result to be achieved, but also as to details by
towards the achievement of the mutually desired result without dictating the which the result is achieved, an employer/employee relationship is likely to
means or methods to be employed in attaining it, and those that control or fix the exist. The Court must be careful to distinguish between control[ling] the conduct
methodology and bind or restrict the party hired to the use of such means. The of another party contracting party by setting out in detail his obligations
first, which aim only to promote the result, create no employer-employee consistent with the freedom of contract, on the one hand, and the discretionary
relationship unlike the second, which address both the result and the means used control an employer daily exercises over its employees conduct on the other.
to achieve it.22
Yonan asserts that the Federation closely supervised his performance at each
We agree with respondents that once in the playing court, the referees exercise soccer game he officiated by giving him an assessor, discussing his performance,
their own independent judgment, based on the rules of the game, as to when and and controlling what clothes he wore while on the field and traveling. Putting
how a call or decision is to be made. The referees decide whether an infraction aside that the Federation did not, for the most part, control what clothes he wore,
was committed, and the PBA cannot overrule them once the decision is made on the Federation did not supervise Yonan, but rather evaluated his performance
the playing court. The referees are the only, absolute, and final authority on the after matches. That the Federation evaluated Yonan as a referee does not mean
playing court. Respondents or any of the PBA officers cannot and do not that he was an employee. There is no question that parties retaining independent
determine which calls to make or not to make and cannot control the referee contractors may judge the performance of those contractors to determine if the
when he blows the whistle because such authority exclusively belongs to the contractual relationship should continue. x x x
referees. The very nature of petitioners job of officiating a professional
basketball game undoubtedly calls for freedom of control by respondents. It is undisputed that the Federation did not control the way Yonan refereed his
games. He had full discretion and authority, under the Laws of the Game, to call
Moreover, the following circumstances indicate that petitioner is an independent the game as he saw fit. x x x In a similar vein, subjecting Yonan to qualification
contractor: (1) the referees are required to report for work only when PBA games standards and procedures like the Federations registration and training
are scheduled, which is three times a week spread over an average of only 105 requirements does not create an employer/employee relationship. x x x
playing days a year, and they officiate games at an average of two hours per
game; and (2) the only deductions from the fees received by the referees are A position that requires special skills and independent judgment weights in favor
withholding taxes. of independent contractor status. x x x Unskilled work, on the other hand,
suggests an employment relationship. x x xHere, it is undisputed that soccer
In other words, unlike regular employees who ordinarily report for work eight refereeing, especially at the professional and international level, requires a great
hours per day for five days a week, petitioner is required to report for work only deal of skill and natural ability. Yonan asserts that it was the Federations training
when PBA games are scheduled or three times a week at two hours per game. In that made him a top referee, and that suggests he was an employee. Though
addition, there are no deductions for contributions to the Social Security substantial training supports an employment inference, that inference is dulled
System, Philhealth or Pag-Ibig, which are the usual deductions from employees significantly or negated when the putative employers activity is the result of a
salaries. These undisputed circumstances buttress the fact that petitioner is an statutory requirement, not the employers choice. x x x
independent contractor, and not an employee of respondents.
In McInturff v. Battle Ground Academy of Franklin,24 it was held that the
Furthermore, the applicable foreign case law declares that a referee is an umpire was not an agent of the Tennessee Secondary School Athletic
independent contractor, whose special skills and independent judgment Association (TSSAA), so the players vicarious liability claim against the

BAUTISTA, Coleen Joyce Q. Page 43 of 58


association should be dismissed. In finding that the umpire is an they were the leaders and active members of the proposed union. Aggrieved,
independent contractor, the Court of Appeals of Tennesse ruled: petitioners filed with the labor arbiter a complaint against private respondent for
unfair labor practice, illegal dismissal and illegal deduction of washing fees. The
The TSSAA deals with umpires to achieve a result-uniform rules for all baseball labor arbiter dismissed said complaint for lack of merit. On appeal, the NLRC
games played between TSSAA member schools. The TSSAA does not supervise reversed the decision of the labor arbiter. Private Respondent then filed a motion
regular season games. It does not tell an official how to conduct the game for reconsideration but was denied. Private Respondent filed another motion for
beyond the framework established by the rules. The TSSAA does not, in the reconsideration which eventually was granted dismissing the complaint of the
vernacular of the case law, control the means and method by which the umpires petitioners for lack of jurisdiction on the ground that there was no employer-
work. employee relationship. Petitioners sought reconsideration of the labor tribunal’s
latest decision which was denied.
In addition, the fact that PBA repeatedly hired petitioner does not by itself prove
that petitioner is an employee of the former. For a hired party to be considered an ISSUE:
employee, the hiring party must have control over the means and methods by
which the hired party is to perform his work, which is absent in this case. The 1. WON an employee-employer relationship exists?
continuous rehiring by PBA of petitioner simply signifies the renewal of the
contract between PBA and petitioner, and highlights the satisfactory services 2. WON the petitioners were illegally dismissed?
rendered by petitioner warranting such contract renewal. Conversely, if PBA RULING:
decides to discontinue petitioners services at the end of the term fixed in the
contract, whether for unsatisfactory services, or violation of the terms and 1. Yes. On the issue of whether or not employer-employee relationship exists,
conditions of the contract, or for whatever other reason, the same merely results admitted is the fact that complainants are taxi drivers purely on the ‘boundary
in the non-renewal of the contract, as in the present case. The non-renewal of the system’. Under this system the driver takes out his unit and pays the owner/
contract between the parties does not constitute illegal dismissal of petitioner by operator a fee commonly called ‘boundary’ for the use of the unit. Petitioners are
respondents. undoubtedly employees of private respondent because as taxi drivers they
perform activities which are usually necessary or desirable in the usual business
WHEREFORE, we DENY the petition and AFFIRM the assailed decision of or trade of their employer. The fact that the drivers do not receive fixed wages is
the Court of Appeals. not sufficient to withdraw the relationship from that of employer and employee.
SO ORDERED. 2. Yes. The termination of employment must be effectuated in accordance with
law. The just and authorized causes for termination of employment are
enumerated under Articles 282, 283 and 284 of the Labor Code. The requirement
JARDIN V. NLRC (G.R. NO. 119268)
 of notice and hearing is set-out in Article 277 (b) of the said Code. Hence,
FACTS: petitioners, being employees of private respondent, can be dismissed only for
just and authorized cause, and after affording them notice and hearing prior to
Petitioners were drivers of private respondent, Philjama International Inc., a termination. In the instant case, private respondent had no valid cause to
domestic corporation engaged in the operation of "Goodman Taxi." Petitioners terminate the employment of petitioners. Neither were there two (2) written
used to drive private respondent’s taxicabs every other day on a 24-hour work notices sent by private respondent informing each of the petitioners that they had
schedule under the boundary system. Under this arrangement, the petitioners been dismissed from work. These lack of valid cause and failure on the part of
earned an average of P400.00 daily. Nevertheless, private respondent admittedly private respondent to comply with the twin-notice requirement underscored the
regularly deducts from petitioners’ daily earnings the amount of P30.00 illegality surrounding petitioners’ dismissal.
supposedly for the washing of the taxi units. Believing that the deduction is
illegal, petitioners decided to form a labor union to protect their rights and Under the law, an employee who is unjustly dismissed from work shall be
interests. entitled to reinstatement without loss of seniority rights and other privileges and
to his full backwages, inclusive of allowances, and to his other benefits or their
Upon learning about the plan of petitioners, private respondent refused to let monetary equivalent computed from the time his compensation was withheld
petitioners drive their taxicabs when they reported for work on August 6, 1991, from him up to the time of his actual reinstatement.
and on succeeding days. Petitioners suspected that they were singled out because

BAUTISTA, Coleen Joyce Q. Page 44 of 58


With regard to the amount deducted for washing of the taxi units, such was not was the respondents who engaged the services of the petitioner without
illegal as such is indeed a practice in the taxi industry and is dictated by fair the intervention of a third party. Second. Wages are defined as
play. “remuneration or earnings, however designated, capable of being
expressed in terms of money, whether fixed or ascertained on a time,
task, piece or commission basis, or other method of calculating the
same, which is payable by an employer to an employee under a written
Chavez vs NLRC, Supreme Packaging Inc, and Alvin Lee
or unwritten contract of employment for work done or to be done, or for
GR No. 146530 January 17, 2005 service rendered or to be rendered. The petitioner is paid on a per trip
basis is not significant. This is merely a method of computing
Facts: compensation. Third. The respondent’s power to dismiss the petitioner
was inherent in the fact that they engaged the services of the petitioner
• The respondent company, Supreme Packaging Inc., is in the business of as truck driver. They exercised this power by terminating the
manufacturing cartons and other packaging materials for export and petitioner’s services albeit in the guise of severance of contractual
distribution. relation due allegedly to the latter’s breach of his contractual obligation.
• The petitioner, Pedro Chavez, was a truck driver (from October 25, Fourth. Compared to an employee, an independent contractor is one
1984) tasked to deliver the respondent company’s products to its who carries on a distinct and independent business and undertakes to
various customers. perform the job, work or service on its own account and under its own
responsibility according to its own manner and method, free from the
• The respondent furnished petitioner with a truck that all deliveries were control and direction of the principal in all matters connected with the
made in accordance with the routing slips issued by the respondent performance of the work except as to the results thereof. Hence while
company indicating the order, time and urgency of delivery. an independent contractor enjoys independence and freedom from the
control and supervision of his principal. An employee is subject to the
• On 1992, the petitioner expressed his desire to avail the benefits that a employer’s power to control the means and methods by which the
regular employee were receiving such as overtime pay, nightshift employee’s work is to be performed and accomplished. A careful
differential pay, and 13th month pay, among others but nothing was review of the records shows that the latter performed his work under the
complied. respondents’ supervision and control. The existence of an employer-
employee relationship cannot be negated by expressly repudiating it in
• On February 20, 1995, petitioner filed a complaint for regularization a contract and providing therein that the employee is an independent
with the Regional Arbitration Branch No. III of NLRC in San contractor when the facts clearly show otherwise. Employment status is
Fernando, Pampanga. Before the case could be heard, respondent defined by law and not by what the parties say it should be.
terminated the services of the petitioner.
• Hence, the petitioner filed an amended complaint for illegal dismissal,
unfair labor practice and non-payment of overtime pay, nightshift COCA COLA BOTTLERS (PHILS.), INC./ERIC MONTINOLA,
differential, and 13th month pay, among others. Manager, Petitioners, 

vs.

Issue: Whether there exists an employer-employee relationship? DR. DEAN N. CLIMACO, Respondent.
Held: FACTS: Respondent Dr. Dean N. Climaco is a medical doctor The Retainer
• Yes an employer-employee do exist. The elements to determine the Agreement, which began on January 1, 1988, was renewed annually (original
existence of an employment relationship are: (1) the selection and contract was only good for one year). The last one expired on December 31,
engagement of the employee; (2) the payment of wages; (3) the power 1993. Despite the non-renewal of the Retainer Agreement, respondent continued
of dismissal; and (4) the employer’s power to control the employee’s to perform his functions as company doctor to Coca-Cola until he received a
conduct. The most important element is the employer’s control of the letter4 dated March 9, 1995 from petitioner company concluding their
employee’s conduct, not only as to the result of the work to be done, but retainership agreement effective 30 days from receipt thereof.
also as to the means and methods to accomplish it. First. Undeniably, it
BAUTISTA, Coleen Joyce Q. Page 45 of 58
It is noted that as early as September 1992, petitioner was already making respondent of his duties. The Labor Arbiter reasoned that the
inquiries regarding his status with petitioner company. Petitioner company, Comprehensive Medical Plan, which contains the respondent’s objectives,
however, did not take any action. Hence, respondent made another inquiry with duties and obligations, does not tell respondent “how to conduct his physical
the DOLE and SSS. Thereafter, respondent inquired from the management of examination, how to immunize, or how to diagnose and treat his patients,
petitioner company whether it was agreeable to recognizing him as a regular employees of [petitioner] company, in each case.”
employee. The management refused to do so.
petitioner company, through the Comprehensive Medical Plan, provided
FILED TWO COMPLAINTS IN THE NLRC: (1) seeking recognition as a guidelines merely to ensure that the end result was achieved, but did not
regular employee of petitioner company and prayed for the payment of all control the means and methods by which respondent performed his assigned
benefits of a regular employee, including 13th Month Pay, Cost of Living tasks.
Allowance, Holiday Pay, Service Incentive Leave Pay, and Christmas Bonus; (2)
a complaint for illegal dismissal against petitioner company with the NLRC, Because the company lacks the power of control that the contract provides that
Bacolod City. respondent shall be directly responsible to the employee concerned and their
dependents for any injury, harm or damage caused through professional
LABOR ARBITER’S DECISION: Case (1) Dismissed, found that petitioner negligence, incompetence or other valid causes of action.
company lacked the power of control over respondent’s performance of his
duties, and recognized as valid the Retainer Agreement between the parties; (2) Respondent is not at all further required to just sit around in the premises and
dismissed the case for illegal dismissal in view of the previous finding of Labor wait for an emergency to occur so as to enable him from using such hours for his
Arbiter that complainant therein, respondent is not an employee of Coca-Cola own benefit and advantage. In fact, complainant maintains his own private clinic
Bottlers Phils., Inc. attending to his private practice in the city, where he services his patients, bills
them accordingly — and if it is an employee of respondent company who is
Respondent appealed both decisions to the NLRC, Fourth Division, Cebu City; attended to by him for special treatment that needs hospitalization or operation,
Dismissed for lack of merit. MR denied. this is subject to a special billing.
APPEAL WITH THE CA: that an employer-employee relationship existed An employee is required to stay in the employer’s workplace or proximately
between petitioner company and respondent after applying the four-fold test. close thereto that he cannot utilize his time effectively and gainfully for his
own purpose. Such is not the prevailing situation here.1awphi1. Court finds
MR BY PETITONER: The Court of Appeals clarified that respondent was a that the schedule of work and the requirement to be on call for emergency cases
“regular part-time employee and should be accorded all the proportionate do not amount to such control, but are necessary incidents to the Retainership
benefits due to this category of employees of [petitioner] Corporation under the Agreement.
CBA.” It sustained its decision on all other matters sought to be reconsidered.
Hence, this petition. The Court also notes that the Retainership Agreement granted to both parties the
power to terminate their relationship upon giving a 30-day notice. Hence,
ISSUE: whether or not there exists an employer-employee relationship between petitioner company did not wield the sole power of dismissal or termination.
the parties; The resolution of the main issue will determine whether the
termination of respondent’s employment is illegal. Considering that there is no employer-employee relationship between the parties,
the termination of the Retainership Agreement, which is in accordance with the
HELD: NO employer-employee relationship. provisions of the Agreement, does not constitute illegal dismissal of respondent.
Four-fold test: (1) the selection and engagement of the employee; (2) the PETITION GRANTED.
payment of wages; (3) the power of dismissal; and (4) the power to control the
employee’s conduct, or the so-called “control test,” considered to be the most
important element.
Gabriel vs. Bilon
The Court agrees with the finding of the Labor Arbiter and the NLRC that the
circumstances of this case show that no employer-employee relationship exists Nelson Bilon, Angel Brazil and Ernesto Pagaygay were jeepney drivers
between the parties. The Labor Arbiter and the NLRC correctly found that of jeepneys owned by Melencio Gabriel. They are paying P400/day for their
petitioner company lacked the power of control over the performance by
BAUTISTA, Coleen Joyce Q. Page 46 of 58
boundary. Later, the drivers were required to pay an additional P50.00 to cover is not sufficient to withdraw the relationship between them from that of
police protection, car wash, deposit fee, and garage fees. employer and employee.
The three drivers refused to pay the additional P50.00. On April 30, 1995, when 3. No. The award of the separation pay is not proper. It was not shown that there
the drivers reported to work, they were not given any jeepney to drive. was a strained relationship between Gabriel and the drivers so as to cause
Eventually, they were dismissed. The three drivers sued Gabriel for illegal animosity if they are reinstated. The Strained Relations Principle is only applied
dismissal. if it is shown that reinstatement would only cause antagonism between the
employer and the employee; and that the only solution is separation and the
The Labor Arbiter ruled in favor of the drivers and ordered Gabriel to pay the payment of separation pay.
drivers their backwages and their separation pay amounting to about a total of
P1.03M.
On April 18, 1997, the LA promulgated its decision and on the same day sent a Felix vs. Buenaseda
copy thereof to Gabriel but Flordeliza (wife of Gabriel) refused to receive the
copy. Apparently, Gabriel died on April 4, 1997. The copy was re-sent via Taking advantage of this Court's decisions involving the removal of various civil
registered mail on May 28, 1997. Flordeliza appealed to the LA on June 5, 1997. servants pursuant to the general reorganization of the government after the
EDSA Revolution, petitioner assails his dismissal as Medical Specialist I of the
The LA dismissed the appeal; it ruled that the appeal was not on time because National Center for Mental Health (formerly the National Mental Hospital) as
the promulgation was made on April 18, 1997 and that the appeal on June 5, illegal and violative of the constitutional provision on security of tenure
1997 was already beyond the ten day period required for appeal. allegedly because his removal was made pursuant to an invalid reorganization.
The National Labor Relations Commission reversed the LA. It ruled that there In Mendoza vs. Quisumbing1 and the consolidated cases involving the
was no employee-employer relationship between the drivers and Gabriel. The reorganization of various government departments and agencies we held:
Court of Appeals reversed the NLRC but it ruled that the separation pay should
not be awarded but rather, the employees should be reinstated. We are constrained to set aside the reorganizations embodied in these
consolidated petitions because the heads of departments and agencies concerned
ISSUES: have chosen to rely on their own concepts of unlimited discretion and
"progressive" ideas on reorganization instead of showing that they have
1. Whether or not the appeal before the LA was made on time. faithfully complied with the clear letter and spirit of the two Constitutions and
the statutes affecting reorganization.2
2. Whether or not there was an employer-employee relationship between the
drivers and Gabriel. In De Guzman vs. CSC3 , we upheld the principle, laid down by Justice J.B.L.
Reyes in Cruz vs. Primicias4 that a valid abolition of an office neither results in a
3. Whether or not there was a strained relation between Gabriel and the drivers.
separation or removal, likewise upholding the corollary principle that "if the
HELD: abolition is void, the incumbent is deemed never to have ceased to hold office,"
in sustaining therein petitioner's right to the position she held prior to the
1. Yes. The appeal was made on time because when the promulgation was made reorganization.
Gabriel is already dead. The ten day requirement to make an appeal is not
applicable in this situation because Gabriel was not yet properly substituted by The instant petition on its face turns on similar facts and issues, which is, that
the wife. The counting of the period should be made starting from the date when petitioner's removal from a permanent position in the National Center for Mental
the copy was sent via registered mail. Therefore, the appeal filed on June 5 was Health as a result of the reorganization of the Department of Health was void.
made on time.
However, a closer look at the facts surrounding the instant petition leads us to a
2. Yes. There exists an employer-employee relationship between the drivers and different conclusion.
Gabriel. The fact that the drivers do not receive fixed wages but get only
After passing the Physician's Licensure Examinations given by the Professional
whatever exceeds the so-called “boundary” [that] they pay to the owner/operator
Regulation Commission in June of 1979, petitioner, Dr. Alfredo B. Felix, joined
the National Center for Mental Health (then the National Mental Hospital) on
BAUTISTA, Coleen Joyce Q. Page 47 of 58
May 26, 1980 as a Resident Physician with an annual salary of P15,264.00.5 In c. Has applied or taken the specialty board examination.
August of 1983, he was promoted to the position of Senior Resident Physician6 a
position he held until the Ministry of Health reorganized the National Center for 3. Each recommendation for extension of appointment must be individually
Mental Health (NCMH) in January of 1988, pursuant to Executive Order No. justified to show not only the qualification of the recommendee, but also what
119. steps he has taken to be board certified.

Under the reorganization, petitioner was appointed to the position of Senior 4. Recommendation for extension of appointment shall be evaluated on a case to
Resident Physician in a temporary capacity immediately after he and other case basis.
employees of the NCMH allegedly tendered their courtesy resignations to the 5. As amended, the other provisions of Department Order No. 34/s. 1988 stands.
Secretary of Health.7 In August of 1988, petitioner was promoted to the position
of Medical Specialist I (Temporary Status), which position was renewed the Petitioner was one of the hundreds of government medical specialist who would
following year.8 have been adversely affected by Department Order No. 347 since he was no yet
accredited by the Psychiatry Specialty Board. Under Department Order No. 478,
In 1988, the Department of Health issued Department Order No. 347 which extension of his appointment remained subject to the guidelines set by the said
required board certification as a prerequisite for renewal of specialist positions in department order. On August 20, 1991, after reviewing petitioner's service record
various medical centers, hospitals and agencies of the said department. and performance, the Medical Credentials Committee of the National Center for
Specifically, Department Order No. 347 provided that specialists working in Mental Health recommended non-renewal of his appointment as Medical
various hospitals and branches of the Department of Health be recognized as Specialist I, informing him of its decision on August 22, 1991. He was, however,
"Fellows" of their respective specialty societies and/or "Diplomates" of their allowed to continue in the service, and receive his salary, allowances and other
specialty boards or both. The Order was issued for the purpose of upgrading the benefits even after being informed of the termination of his appointment.
quality of specialties in DOH hospitals by requiring them to pass rigorous
theoretical and clinical (bedside) examinations given by recognized specialty On November 25, 1991, an emergency meeting of the Chiefs of Service was
boards, in keeping up with international standards of medical practice. held to discuss, among other matters, the petitioner's case. In the said meeting
Dr. Vismindo de Grecia, petitioner's immediate supervisor, pointed out
Upon representation of the Chiefs of Hospitals of various government hospitals petitioner's poor performance, frequent tardiness and inflexibility as among the
and medical centers, (then) Secretary of Health Alfredo Bengzon issued factors responsible for the recommendation not to renew his appointment.9 With
Department Order No. 347 providing for an extension of appointments of one exception, other department heads present in the meeting expressed the same
Medical Specialist positions in cases where the termination of medical specialist opinion, 10 and the overwhelming concensus was for non-renewal. The matter
who failed to meet the requirement for board certification might result in the was thereafter referred to the Civil Service Commission, which on February 28,
disruption of hospital services. Department Order No. 478 issued the following 1992 ruled that "the temporary appointment (of petitioner) as Medical Specialist
guidelines: I can be terminated at any time . . ." and that "[a]ny renewal of such appointment
1. As a general policy, the provision of Department Order No. 347, Sec. 4 shall is within the discretion of the appointing authority." 11 Consequently, in a
apply unless the Chief of Hospital requests for exemption, certifies that its memorandum dated March 25, 1992 petitioner was advised by hospital
application will result in the disruption of the delivery service together with the authorities to vacate his cottage since he was no longer with said memorandum
steps taken to implement Section 4, and submit a plan of action, lasting no more petitioner filed a petition with the Merit System Protection Board (MSPB)
than 3-years, for the eventual phase out of non-Board certified medical complaining about the alleged harassment by respondents and questioning the
specialties. non-renewal of his appointment. In a Decision rendered on July 29, 1992, the
(MSPB) dismissed petitioner's complaint for lack of merit, finding that:
2. Medical specialist recommended for extension of appointment shall meet the
following minimum criteria: As an apparent incident of the power to appoint, the renewal of a temporary
appointment upon or after its expiration is a matter largely addressed to the
a. DOH medical specialist certified sound discretion of the appointing authority. In this case, there is no dispute that
Complainant was a temporary employee and his appointment expired on August
b. Has been in the service of the Department at least three (3) years prior to 22, 1991. This being the case, his re-appointment to his former position or the
December 1988. renewal of his temporary appointment would be determined solely by the proper
appointing authority who is the Secretary, Department of Health upon the
BAUTISTA, Coleen Joyce Q. Page 48 of 58
favorable recommendation of the Chief of Hospital III, NCMH. The Supreme TO TEMPORARY WAS DONE IN BAD FAITH IN THE GUISE OF
Court in the case of Central Bank vs. Civil Service Commission G.R. Nos. REORGANIZATION AND THUS INVALID, BEING VIOLATIVE OF THE
80455-56 dated April 10, 1989, held as follows: PETITIONER'S RIGHT OF SECURITY OF TENURE.
The power of appointment is essentially a political question involving Responding to the instant petition, 12 the Solicitor General contends that 1) the
considerations of wisdom which only the appointing authority can decide. petitioner's temporary appointment after the reorganization pursuant to E.O. No.
119 were valid and did not violate his constitutional right of security of
In this light, Complainant therefore, has no basis in law to assail the non-renewal tenure; 13 2) petitioner is guilty of estoppel or laches, having acquiesced to such
of his expired temporary appointment much less invoke the aid of this Board temporary appointments from 1988 to 1991; 14 and 3) the respondent
cannot substitute its judgment to that of the appointing authority nor direct the Commission did not act with grave abuse of discretion in affirming the
latter to issue an appointment in the complainant's favor. petitioner's non-renewal of his appointment at the National Center for Mental
Hospital.15
Regarding the alleged Department Order secured by the complainant from the
Department of Health (DOH), the Board finds the same inconsequential. Said We agree.
Department Order merely allowed the extension of tenure of Medical Specialist I
for a certain period but does not mandate the renewal of the expired The patent absurdity of petitioner's posture is readily obvious.
appointment. A residency or resident physician position in a medical specialty is never a
permanent one. Residency connotes training and temporary status. It is the step
The Board likewise finds as baseless complainant's allegation of harassment. It taken by a physician right after post-graduate internship (and after hurdling the
should be noted that the subsistence, quarters and laundry benefits provided to Medical Licensure Examinations) prior to his recognition as a specialist or sub-
the Complainant were in connection with his employment with the NCMH. Now specialist in a given field.
that his employment ties with the said agency are severed, he eventually loses
his right to the said benefits. Hence, the Hospital Management has the right to A physician who desires to specialize in Cardiology takes a required three-year
take steps to prevent him from the continuous enjoyment thereof, including the accredited residency in Internal Medicine (four years in DOH hospitals) and
occupancy of the said cottage, after his cessation form office. moves on to a two or three-year fellowship or residency in Cardiology before he
is allowed to take the specialty examinations given by the appropriate
In sum, the actuations of Dr. Buenaseda and Lt. Col. Balez are not shown to accrediting college. In a similar manner, the accredited Psychiatrist goes through
have been tainted with any legal infirmity, thus rendering as baseless, this instant the same stepladder process which culminates in his recognition as a fellow or
complaint. diplomate (or both) of the Psychiatry Specialty Board. 16 This upward
movement from residency to specialist rank, institutionalized in the residency
Said decision was appealed to the Civil Service Commission which dismissed
training process, guarantees minimum standards and skills and ensures that the
the same in its Resolution dated December 1, 1992. Motion for Reconsideration
physician claiming to be a specialist will not be set loose on the community
was denied in CSC Resolution No. 93-677 dated February 3, 1993, hence this
without the basic knowledge and skills of his specialty. Because acceptance and
appeal, in which petitioner interposes the following assignments of errors:
promotion requirements are stringent, competitive, and based on merit.
I acceptance to a first year residency program is no guaranty that the physician
will complete the program. Attribution rates are high. Some programs are
THE PUBLIC RESPONDENT CIVIL SERVICE COMMISSION ERRED IN pyramidal. Promotion to the next post-graduate year is based on merit and
HOLDING THAT BY SUBMITTING HIS COURTESY RESIGNATION AND performance determined by periodic evaluations and examinations of
ACCEPTING HIS TEMPORARY APPOINTMENT PETITIONER HAD knowledge, skills and bedside manner. 17 Under this system, residents, specialty
EFFECTIVELY DIVESTED HIMSELF OF HIS SECURITY OF TENURE, those in university teaching hospitals 18 enjoy their right to security of tenure
CONSIDERING THE CIRCUMSTANCES OF SUCH COURTESY only to the extent that they periodically make the grade, making the situation
RESIGNATION AND ACCEPTANCE OF APPOINTMENT. quite unique as far as physicians undergoing post-graduate residencies and
fellowships are concerned. While physicians (or consultants) of specialist rank
II are not subject to the same stringent evaluation procedures, 19 specialty societies
THE RESPONDENT COMMISSION IN NOT DECLARING THAT THE require continuing education as a requirement for accreditation for good
CONVERSION OF THE PERMANENT APPOINTMENT OF PETITIONER standing, in addition to peer review processes based on performance, mortality

BAUTISTA, Coleen Joyce Q. Page 49 of 58


and morbidity audits, feedback from residents, interns and medical students and There are weighty reasons of public policy and convenience which demand that
research output. The nature of the contracts of resident physicians meet any claim to any position in the civil service, permanent, temporary of
traditional tests for determining employer-employee relationships, but because otherwise, or any claim to a violation of the constitutional provision on security
the focus of residency is training, they are neither here nor there. Moreover, of tenure be made within a reasonable period of time. An assurance of some
stringent standards and requirements for renewal of specialist-rank positions or degree of stability in the civil service is necessary in order to avoid needless
for promotion to the next post-graduate residency year are necessary because disruptions in the conduct of public business. Delays in the statement of a right
lives are ultimately at stake. to any position are strongly discouraged. 21 In the same token, the failure to
assert a claim or the voluntary acceptance of another position in government,
Petitioner's insistence on being reverted back to the status quo prior to the obviously without reservation, leads to a presumption that the civil servant has
reorganizations made pursuant to Executive Order No. 119 would therefore be either given up his claim of has already settled into the new position. This is the
akin to a college student asking to be sent back to high school and staying there. essence of laches which is the failure or neglect, for an unreasonable and
From the position of senior resident physician, which he held at the time of the unexplained length of time to do that which, by exercising due diligence, could
government reorganization, the next logical step in the stepladder process was or should have been done earlier; it is the negligence or omission to assert a right
obviously his promotion to the rank of Medical Specialist I, a position which he within a reasonable time, warranting a presumption that the party entitled to
apparently accepted not only because of the increase in salary and rank but assert it either has abandoned it or declined to assert it. 22
because of the prestige and status which the promotion conferred upon him in
the medical community. Such status, however, clearly carried with it certain In fine, this petition, on its surface, seems to be an ordinary challenge against the
professional responsibilities including the responsibility of keeping up with the validity of the conversion of petitioner's position from permanent resident
minimum requirements of specialty rank, the responsibility of keeping abreast physician status to that of a temporary resident physician pursuant to the
with current knowledge in his specialty rank, the responsibility of completing government reorganization after the EDSA Revolution. What is unique to
board certification requirements within a reasonable period of time. The petitioner's averments is the fact that he hardly attempts to question the validity
evaluation made by the petitioner's peers and superiors clearly showed that he of his removal from his position of Medical Specialist I (Temporary) of the
was deficient in a lot of areas, in addition to the fact that at the time of his non- National Center for Mental Health, which is plainly the pertinent issue in the
renewal, he was not even board-certified. case at bench. The reason for this is at once apparent, for there is a deliberate and
dishonest attempt to a skirt the fundamental issue first, by falsely claiming that
It bears emphasis that at the time of petitioner's promotion to the position of petitioner was forced to submit his courtesy resignation in 1987 when he
Medical Specialist I (temporary) in August of 1988, no objection was raised by actually did not; and second, by insisting on a right of claim clearly abandoned
him about the change of position or the temporary nature of designation. The by his acceptance of the position of Medical Specialist I (Temporary), which is
pretense of objecting to the promotion to specialist rank apparently came only as hence barred by laches.
an afterthought, three years later, following the non-renewal of his position by
the Department of Health. The validity of the government reorganization of the Ministry of Health pursuant
to E.O. 119 not being the real issue in the case at bench, we decline to make any
We lay stress to the fact that petitioner made no attempt to oppose earlier further pronouncements relating to petitioner's contentions relating to the effect
renewals of his temporary Specialist I contracts in 1989 and 1990, clearly on him of the reorganization except to say that in the specific case of the change
demonstrating his acquiescence to — if not his unqualified acceptance of the in designation from permanent resident physician to temporary resident
promotion (albeit of a temporary nature) made in 1988. Whatever objections physician, a change was necessary, overall, to rectify a ludicrous situation
petitioner had against the earlier change from the status of permanent senior whereby some government resident physicians were erroneously being classified
resident physician to temporary senior physician were neither pursued nor as permanent resident physicians in spite of the inherently temporary nature of
mentioned at or after his designation as Medical Specialist I (Temporary). He is the designation. The attempts by the Department of Health not only to streamline
therefore estopped from insisting upon a right or claim which he had plainly these positions but to make them conform to current standards of specialty
abandoned when he, from all indications, enthusiastically accepted the practice is a step in a positive direction. The patient who consults with a
promotion. His negligence to assert his claim within a reasonable time, coupled physician of specialist rank should at least be safe in the assumption that the
with his failure to repudiate his promotion to a temporary position, warrants a government physician of specialist rank: 1.) has completed all necessary
presumption, in the words of this Court in Tijam vs. Sibonghanoy, 20that he requirements at least assure the public at large that those in government centers
"either abandoned (his claim) or declined to assert it." who claim to be specialists in specific areas of Medicine possess the minimum
knowledge and skills required to fulfill that first and foremost maxim, embodied
BAUTISTA, Coleen Joyce Q. Page 50 of 58
in the Hippocratic Oath, that they do their patients no harm. Primium non Regulations of the Labor Code, the rule shall apply to all, except… (d) Field
nocere. personnel and other employees whose performance is unsupervised by the
employer including those who are engaged on task or contract basis, purely
Finally, it is crystal clear, from the facts of the case at bench, that the petitioner commission basis, or those who are paid in a fixed amount for performing work
accepted a temporary appointment (Medical Specialist I). As respondent Civil irrespective of the time consumed in the performance thereof.
Service Commission has correctly pointed out 23, the appointment was for a
definite and renewable period which, when it was not renewed, did not involve a Petitioner’s contention that Bautista is not entitled to service incentive leave
dismissal but an expiration of the petitioner's term. because he is paid on a purely commission basis must fail. The phrase following
“Field personnel” should not be construed as a separate classification of
ACCORDINGLY, the petition is hereby DISMISSED, for lack of merit. employees but is merely an amplification of the definition of field personnel
defined under the Labor Code.
Bautista neither falls under the category field personnel. As defined, field
Auto Bus Transport vs Bautista
personnel are those whose performance of service is unsupervised by the
G.R. No. 156367. May 16, 2005 employer, the workplace being away from the principal place of business and
whose hours and days of work cannot be determined with reasonable certainty.
Facts: Bus companies have ways of determining the hours worked by their drivers and
conductors with reasonable certainty. The courts have taken judicial notice of the
Bautista, a driver-conductor of the Autobus transport, was dismissed after his following:
failure to pay an amount demanded by the company for the repair of the bus
damaged in an accident caused by him. 1. Along the routes traveled, there are inspectors assigned at strategic
places who board the bus to inspect the passengers, the punched tickets,
He receives compensation by way of commission per travel. and the conductor’s reports;
Bautista complained for illegal dismissal with money claims for nonpayment of 2. There is a mandatory once-a week car barn or shop day, where the bus
13th month pay and service incentive leave pay against Autobus. is regularly checked;
Auto Bus’ Defenses: 3. The drivers and conductors must be at specified place and time, as they
1. Bautista’s employment was replete with offenses involving reckless observe prompt departure and arrival;
imprudence, gross negligence, and dishonesty supported with copies of 4. At every depot, there is always a dispatcher whose function is to see to
letters, memos, irregularity reports, warrants of arrest; it that the bus and crew leaves and arrives at the estimated proper time.
2. In the exercise of management prerogative, Bautista was terminated By these reasons, drivers and conductors are therefore under constant
only after providing for an opportunity to explain: supervision while in the performance of their work.
Labor Arbiter dismissed the complaint however awarded Bautista his 13thmonth
pay and service incentive leave pay.
David vs. Macasio
Auto Bus appealed. NLRC deleted the 13th month pay award. In the CA,
NLRC’s decision was affirmed. We resolve in this petition for review on certiorari1 the challenge to the
November 22, 2010 decision2 and the January 31, 2011 resolution3 of the Court
Issue: Whether or not respondent is entitled to service incentive leave pay. of Appeals (CA) in CA-G.R. SP No. 116003. The CA decision annulled and set
Held: Yes. aside the May 26, 2010 decision4 of the National Labor Relations Commission
(NLRC)5 which, in turn, affirmed the April 30, 2009 Decision6 of the Labor
Under Article 95 of the Labor Code, every employee who has rendered at least Arbiter (LA). The LA's decision dismissed respondent John G. Macasio's
one year or service shall be entitled to a yearly service incentive leave of five monetary claims.
days with pay. In Section 1, Rule V, Book III of the Implementing Rules and
BAUTISTA, Coleen Joyce Q. Page 51 of 58
The Factual Antecedents "pakyaw" or task basis. The LA noted the following facts to support this finding:
(1) Macasio received the fixed amount of ₱700.00 for every work done,
In January 2009, Macasio filed before the LA a complaint7 against petitioner regardless of the number of hours that he spent in completing the task and of the
Ariel L. David, doing business under the name and style "Yiels Hog Dealer," for volume or number of hogs that he had to chop per engagement; (2) Macasio
non-payment of overtime pay, holiday pay and 13th month pay. He also claimed usually worked for only four hours, beginning from 10:00 p.m. up to 2:00 a.m.
payment for moral and exemplary damages and attorney’s fees. Macasio also of the following day; and (3) the ₱700.00 fixed wage far exceeds the then
claimed payment for service incentive leave (SIL).8 prevailing daily minimum wage of ₱382.00. The LA added that the nature of
David’s business as hog dealer supports this "pakyaw" or task basis arrangement.
Macasio alleged9 before the LA that he had been working as a butcher for David
since January 6, 1995. Macasio claimed that David exercised effective control The LA concluded that as Macasio was engaged on "pakyaw" or task basis, he is
and supervision over his work, pointing out that David: (1) set the work day, not entitled to overtime, holiday, SIL and 13th month pay.
reporting time and hogs to be chopped, as well as the manner by which he was to
perform his work; (2) daily paid his salary of ₱700.00, which was increased The NLRC’s Ruling
from ₱600.00 in 2007, ₱500.00 in 2006 and ₱400.00 in 2005; and (3) approved
and disapproved his leaves. Macasio added that David owned the hogs delivered In its May 26, 2010 decision,16 the NLRC affirmed the LA ruling.17 The NLRC
for chopping, as well as the work tools and implements; the latter also rented the observed that David did not require Macasio to observe an eight hour work
workplace. Macasio further claimed that David employs about twenty-five (25) schedule to earn the fixed ₱700.00 wage; and that Macasio had been performing
butchers and delivery drivers. a non-time work, pointing out that Macasio was paid a fixed amount for the
completion of the assigned task, irrespective of the time consumed in its
In his defense,10 David claimed that he started his hog dealer business in 2005 performance. Since Macasio was paid by result and not in terms of the time that
and that he only has ten employees. He alleged that he hired Macasio as a he spent in the workplace, Macasio is not covered by the Labor Standards laws
butcher or chopper on "pakyaw" or task basis who is, therefore, not entitled to on overtime, SIL and holiday pay, and 13th month pay under the Rules and
overtime pay, holiday pay and 13th month pay pursuant to the provisions of the Regulations Implementing the 13th month pay law.18
Implementing Rules and Regulations (IRR) of the Labor Code. David pointed
out that Macasio: (1) usually starts his work at 10:00 p.m. and ends at 2:00 a.m. Macasio moved for reconsideration19 but the NLRC denied his motion in its
of the following day or earlier, depending on the volume of the delivered hogs; August 11, 2010 resolution,20 prompting Macasio to elevate his case to the CA
(2) received the fixed amount of ₱700.00 per engagement, regardless of the via a petition for certiorari.21
actual number of hours that he spent chopping the delivered hogs; and (3) was The CA’s Ruling
not engaged to report for work and, accordingly, did not receive any fee when no
hogs were delivered. In its November 22, 2010 decision,22 the CA partly granted Macasio’s certiorari
petition and reversed the NLRC’s ruling for having been rendered with grave
Macasio disputed David’s allegations.11 He argued that, first, David did not start abuse of discretion.
his business only in 2005. He pointed to the Certificate of Employment12 that
David issued in his favor which placed the date of his employment, albeit While the CA agreed with the LAand the NLRC that Macasio was a task basis
erroneously, in January 2000. Second, he reported for work every day which the employee, it nevertheless found Macasio entitled to his monetary claims
payroll or time record could have easily proved had David submitted them in following the doctrine laid down in Serrano v. Severino Santos Transit.23 The CA
evidence. explained that as a task basis employee, Macasio is excluded from the coverage
of holiday, SIL and 13th month pay only if he is likewise a "field personnel." As
Refuting Macasio’s submissions,13 David claims that Macasio was not his defined by the Labor Code, a "field personnel" is one who performs the work
employee as he hired the latter on "pakyaw" or task basis. He also claimed that away from the office or place of work and whose regular work hours cannot be
he issued the Certificate of Employment, upon Macasio’s request, only for determined with reasonable certainty. In Macasio’s case, the elements that
overseas employment purposes. He pointed to the "Pinagsamang Sinumpaang characterize a "field personnel" are evidently lacking as he had been working as
Salaysay,"14 executed by Presbitero Solano and Christopher (Antonio Macasio’s a butcher at David’s "Yiels Hog Dealer" business in Sta. Mesa, Manila under
co-butchers), to corroborate his claims. David’s supervision and control, and for a fixed working schedule that starts at
In the April 30, 2009 decision,15 the LA dismissed Macasio’s complaint for lack 10:00 p.m.
of merit. The LA gave credence to David’s claim that he engaged Macasio on
BAUTISTA, Coleen Joyce Q. Page 52 of 58
Accordingly, the CA awarded Macasio’s claim for holiday, SIL and 13th month the present petition raise purely factual issues that are not proper for a petition
pay for three years, with 10% attorney’s fees on the total monetary award. The for review on certiorari. These issues – whether he (Macasio) was paid by result
CA, however, denied Macasio’s claim for moral and exemplary damages for lack or on "pakyaw" basis; whether he was a "field personnel"; whether an employer-
of basis. employee relationship existed between him and David; and whether David
exercised control and supervision over his work – are all factual in nature and
David filed the present petition after the CA denied his motion for are, therefore, proscribed in a Rule 45 petition. He argues that the CA’s factual
reconsideration24 in the CA’s January 31, 2011 resolution.25 findings bind this Court, absent a showing that such findings are not supported
by the evidence or the CA’s judgment was based on a misapprehension of facts.
The Petition
He adds that the issue of whether an employer-employee relationship existed
In this petition,26 David maintains that Macasio’s engagement was on a between him and David had already been settled by the LA29 and the
"pakyaw" or task basis. Hence, the latter is excluded from the coverage of NLRC30 (as well as by the CA per Macasio’s manifestation before this Court
holiday, SIL and 13th month pay. David reiterates his submissions before the dated November 15, 2012),31 in his favor, in the separate illegal case that he filed
lower tribunals27 and adds that he never had any control over the manner by against David.
which Macasio performed his work and he simply looked on to the "end-result."
The Issue
He also contends that he never compelled Macasio to report for work and that
under their arrangement, Macasio was at liberty to choose whether to report for The issue revolves around the proper application and interpretation of the labor
work or not as other butchers could carry out his tasks. He points out that Solano law provisions on holiday, SIL and 13th month pay to a worker engaged on
and Antonio had, in fact, attested to their (David and Macasio’s) established "pakyaw" or task basis. In the context of the Rule 65 petition before the CA, the
"pakyawan" arrangement that rendered a written contract unnecessary. In as issue is whether the CA correctly found the NLRC in grave abuse of discretion
much as Macasio is a task basis employee – who is paid the fixed amount of in ruling that Macasio is entitled to these labor standards benefits.
₱700.00 per engagement regardless of the time consumed in the performance –
David argues that Macasio is not entitled to the benefits he claims. Also, he The Court’s Ruling
posits that because he engaged Macasio on "pakyaw" or task basis then no
employer-employee relationship exists between them. We partially grant the petition.

Finally, David argues that factual findings of the LA, when affirmed by the Preliminary considerations: the Montoya ruling and the factual-issue-bar rule
NLRC, attain finality especially when, as in this case, they are supported by In this Rule 45 petition for review on certiorari of the CA’s decision rendered
substantial evidence. Hence, David posits that the CA erred in reversing the under a Rule 65 proceeding, this Court’s power of review is limited to resolving
labor tribunals’ findings and granting the prayed monetary claims. matters pertaining to any perceived legal errors that the CA may have committed
The Case for the Respondent in issuing the assailed decision. This is in contrast with the review for
jurisdictional errors, which we undertake in an original certiorari action. In
Macasio counters that he was not a task basis employee or a "field personnel" as reviewing the legal correctness of the CA decision, we examine the CA decision
David would have this Court believe.28 He reiterates his arguments before the based on how it determined the presence or absence of grave abuse of discretion
lower tribunals and adds that, contrary to David’s position, the ₱700.00 fee that in the NLRC decision before it and not on the basis of whether the NLRC
he was paid for each day that he reported for work does not indicate a "pakyaw" decision on the merits of the case was correct.32 In other words, we have to be
or task basis employment as this amount was paid daily, regardless of the keenly aware that the CA undertook a Rule 65 review, not a review on appeal, of
number or pieces of hogs that he had to chop. Rather, it indicates a daily-wage the NLRC decision challenged before it.33
method of payment and affirms his regular employment status. He points out
that David did not allege or present any evidence as regards the quota or number Moreover, the Court’s power in a Rule 45 petition limits us to a review of
of hogs that he had to chop as basis for the "pakyaw" or task basis payment; questions of law raised against the assailed CA decision.34
neither did David present the time record or payroll to prove that he worked for In this petition, David essentially asks the question – whether Macasio is entitled
less than eight hours each day. Moreover, David did not present any contract to to holiday, SIL and 13th month pay. This one is a question of law. The
prove that his employment was on task basis. As David failed to prove the determination of this question of law however is intertwined with the largely
alleged task basis or "pakyawan" agreement, Macasio concludes that he was factual issue of whether Macasio falls within the rule on entitlement to these
David’s employee. Procedurally, Macasio points out that David’s submissions in
BAUTISTA, Coleen Joyce Q. Page 53 of 58
claims or within the exception. In either case, the resolution of this factual issue At any rate, even if we indulge the petitioner, we find his claim that no
presupposes another factual matter, that is, the presence of an employer- employer-employee relationship exists baseless. Employing the control test,38 we
employee relationship between David and Macasio. find that such a relationship exist in the present case.
In insisting before this Court that Macasio was not his employee, David argues Even a factual review shows that Macasio is David’s employee
that he engaged the latter on "pakyaw" or task basis. Very noticeably, David
confuses engagement on "pakyaw" or task basis with the lack of employment To determine the existence of an employer-employee relationship, four elements
relationship. Impliedly, David asserts that their "pakyawan" or task basis generally need to be considered, namely: (1) the selection and engagement of the
arrangement negates the existence of employment relationship. employee; (2) the payment of wages; (3) the power of dismissal; and (4) the
power to control the employee’s conduct. These elements or indicators comprise
At the outset, we reject this assertion of the petitioner. Engagement on "pakyaw" the so-called "four-fold" test of employment relationship. Macasio’s relationship
or task basis does not characterize the relationship that may exist between the with David satisfies this test.
parties, i.e., whether one of employment or independent contractorship. Article
97(6) of the Labor Code defines wages as "xxx the remuneration or earnings, First, David engaged the services of Macasio, thus satisfying the element of
however designated, capable of being expressed in terms of money, whether "selection and engagement of the employee." David categorically confirmed this
fixed or ascertained on a time, task, piece, or commission basis, or other method fact when, in his "Sinumpaang Salaysay," he stated that "nag apply po siya sa
of calculating the same, which is payable by an employer to an employee under akin at kinuha ko siya na chopper[.]"39 Also, Solano and Antonio stated in their
a written or unwritten contract of employment for work done or to be done, or "Pinagsamang Sinumpaang Salaysay"40 that "[k]ami po ay nagtratrabaho sa Yiels
for services rendered or to be rendered[.]"35 In relation to Article 97(6), Article xxx na pag-aari ni Ariel David bilang butcher" and "kilalanamin si xxx Macasio
10136 of the Labor Code speaks of workers paid by results or those whose pay is na isa ring butcher xxx ni xxx David at kasama namin siya sa aming trabaho."
calculated in terms of the quantity or quality of their work output which includes Second, David paid Macasio’s wages.Both David and Macasio categorically
"pakyaw" work and other non-time work. stated in their respective pleadings before the lower tribunals and even before
More importantly, by implicitly arguing that his engagement of Macasio on this Court that the former had been paying the latter ₱700.00 each day after the
"pakyaw" or task basis negates employer-employee relationship, David would latter had finished the day’s task. Solano and Antonio also confirmed this fact of
want the Court to engage on a factual appellate review of the entire case to wage payment in their "Pinagsamang Sinumpaang Salaysay."41 This satisfies the
determine the presence or existence of that relationship. This approach however element of "payment of wages."
is not authorized under a Rule 45 petition for review of the CA decision rendered Third, David had been setting the day and time when Macasio should report for
under a Rule 65 proceeding. work. This power to determine the work schedule obviously implies power of
First, the LA and the NLRC denied Macasio’s claim not because of the absence control. By having the power to control Macasio’s work schedule, David could
of an employer-employee but because of its finding that since Macasio is paid on regulate Macasio’s work and could even refuse to give him any assignment,
pakyaw or task basis, then he is not entitled to SIL, holiday and 13th month pay. thereby effectively dismissing him.
Second, we consider it crucial, that in the separate illegal dismissal case Macasio And fourth, David had the right and power to control and supervise Macasio’s
filed with the LA, the LA, the NLRC and the CA uniformly found the existence work as to the means and methods of performing it. In addition to setting the day
of an employer-employee relationship.37 and time when Macasio should report for work, the established facts show that
In other words, aside from being factual in nature, the existence of an employer- David rents the place where Macasio had been performing his tasks. Moreover,
employee relationship is in fact a non-issue in this case. To reiterate, in deciding Macasio would leave the workplace only after he had finished chopping all of
a Rule 45 petition for review of a labor decision rendered by the CA under 65, the hog meats given to him for the day’s task. Also, David would still engage
the narrow scope of inquiry is whether the CA correctly determined the presence Macasio’s services and have him report for work even during the days when
or absence of grave abuse of discretion on the part of the NLRC. In concrete only few hogs were delivered for butchering.
question form, "did the NLRC gravely abuse its discretion in denying Macasio’s Under this overall setup, all those working for David, including Macasio, could
claims simply because he is paid on a non-time basis?" naturally be expected to observe certain rules and requirements and David would
necessarily exercise some degree of control as the chopping of the hog meats
would be subject to his specifications. Also, since Macasio performed his tasks
BAUTISTA, Coleen Joyce Q. Page 54 of 58
at David’s workplace, David could easily exercise control and supervision over Implementing PD No. 851. Uniformly, these provisions exempt workers paid on
the former. Accordingly, whether or not David actually exercised this right or "pakyaw" or task basis from the coverage of holiday, SIL and 13th month pay.
power to control is beside the point as the law simply requires the existence of
this power to control 4243 or, as in this case, the existence of the right and In reversing the labor tribunals’ rulings, the CA similarly relied on these
opportunity to control and supervise Macasio.44 provisions, as well as on Section 1, Rule V of the IRR of the Labor Code and the
Court’s ruling in Serrano v. Severino Santos Transit.46 These labor law
In sum, the totality of the surrounding circumstances of the present case provisions, when read together with the Serrano ruling, exempt those engaged on
sufficiently points to an employer-employee relationship existing between David "pakyaw" or task basis only if they qualify as "field personnel."
and Macasio.
In other words, what we have before us is largely a question of law regarding the
Macasio is engaged on "pakyaw" or task basis correct interpretation of these labor code provisions and the implementing rules;
although, to conclude that the worker is exempted or covered depends on the
At this point, we note that all three tribunals – the LA, the NLRC and the CA – facts and in this sense, is a question of fact: first, whether Macasio is a "field
found that Macasio was engaged or paid on "pakyaw" or task basis. This factual personnel"; and second, whether those engaged on "pakyaw" or task basis, but
finding binds the Court under the rule that factual findings of labor tribunals who are not "field personnel," are exempted from the coverage of holiday, SIL
when supported by the established facts and in accord with the laws, especially and 13th month pay.
when affirmed by the CA, is binding on this Court.
To put our discussion within the perspective of a Rule 45 petition for review of a
A distinguishing characteristic of "pakyaw" or task basis engagement, as CA decision rendered under Rule 65 and framed in question form, the legal
opposed to straight-hour wage payment, is the non-consideration of the time question is whether the CA correctly ruled that it was grave abuse of discretion
spent in working. In a task-basis work, the emphasis is on the task itself, in the on the part of the NLRC to deny Macasio’s monetary claims simply because he
sense that payment is reckoned in terms of completion of the work, not in terms is paid on a non-time basis without determining whether he is a field personnel
of the number of time spent in the completion of work.45 Once the work or task or not.
is completed, the worker receives a fixed amount as wage, without regard to the
standard measurements of time generally used in pay computation. To resolve these issues, we need tore-visit the provisions involved.
In Macasio’s case, the established facts show that he would usually start his Provisions governing SIL and holiday pay
work at 10:00 p.m. Thereafter, regardless of the total hours that he spent at the
workplace or of the total number of the hogs assigned to him for chopping, Article 82 of the Labor Code provides the exclusions from the coverage of Title
Macasio would receive the fixed amount of ₱700.00 once he had completed his I, Book III of the Labor Code - provisions governing working conditions and
task. Clearly, these circumstances show a "pakyaw" or task basis engagement rest periods.
that all three tribunals uniformly found. Art. 82. Coverage.— The provisions of [Title I] shall apply to employees in all
In sum, the existence of employment relationship between the parties is establishments and undertakings whether for profit or not, but not to government
determined by applying the "four-fold" test; engagement on "pakyaw" or task employees, managerial employees, field personnel, members of the family of the
basis does not determine the parties’ relationship as it is simply a method of pay employer who are dependent on him for support, domestic helpers, persons in
computation. Accordingly, Macasio is David’s employee, albeit engaged on the personal service of another, and workers who are paid by results as
"pakyaw" or task basis. determined by the Secretary of Labor in appropriate regulations.

As an employee of David paid on pakyaw or task basis, we now go to the core xxxx
issue of whether Macasio is entitled to holiday, 13th month, and SIL pay. "Field personnel" shall refer to non-agricultural employees who regularly
On the issue of Macasio’s entitlement to holiday, SIL and 13th month pay perform their duties away from the principal place of business or branch office
of the employer and whose actual hours of work in the field cannot be
The LA dismissed Macasio’s claims pursuant to Article 94 of the Labor Code in determined with reasonable certainty. [emphases and underscores ours]
relation to Section 1, Rule IV of the IRR of the Labor Code, and Article 95 of
the Labor Code, as well as Presidential Decree (PD) No. 851. The NLRC, on the Among the Title I provisions are the provisions on holiday pay (under Article 94
other hand, relied on Article 82 of the Labor Code and the Rules and Regulations of the Labor Code) and SIL pay (under Article 95 of the Labor Code). Under
BAUTISTA, Coleen Joyce Q. Page 55 of 58
Article 82,"field personnel" on one hand and "workers who are paid by results" Under these provisions, the general rule is that holiday and SIL pay provisions
on the other hand, are not covered by the Title I provisions. The wordings of cover all employees. To be excluded from their coverage, an employee must be
Article82 of the Labor Code additionally categorize workers "paid by results" one of those that these provisions expressly exempt, strictly in accordance with
and "field personnel" as separate and distinct types of employees who are the exemption. Under the IRR, exemption from the coverage of holiday and SIL
exempted from the Title I provisions of the Labor Code. pay refer to "field personnel and other employees whose time and performance
is unsupervised by the employer including those who are engaged on task or
The pertinent portion of Article 94 of the Labor Code and its corresponding contract basis[.]" Note that unlike Article 82 of the Labor Code, the IRR on
provision in the IRR47 reads: holiday and SIL pay do not exclude employees "engaged on task basis" as a
separate and distinct category from employees classified as "field personnel."
Art. 94. Right to holiday pay. (a) Every worker shall be paid his regular daily
Rather, these employees are altogether merged into one classification of
wage during regular holidays, except in retail and service establishments
exempted employees.
regularly employing less than (10) workers[.] [emphasis ours]
Because of this difference, it may be argued that the Labor Code may be
xxxx
interpreted to mean that those who are engaged on task basis, per se, are
SECTION 1. Coverage. – This Rule shall apply to all employees except: excluded from the SIL and holiday payment since this is what the Labor Code
provisions, in contrast with the IRR, strongly suggest. The arguable
xxxx interpretation of this rule may be conceded to be within the discretion granted to
the LA and NLRC as the quasi-judicial bodies with expertise on labor matters.
(e)Field personnel and other employees whose time and performance is
unsupervised by the employer including those who are engaged on task or However, as early as 1987 in the case of Cebu Institute of Technology v.
contract basis, purely commission basis, or those who are paid a fixed amount Ople49 the phrase "those who are engaged on task or contract basis" in the rule
for performing work irrespective of the time consumed in the performance has already been interpreted to mean as follows:
thereof. [emphases ours]
[the phrase] should however, be related with "field personnel" applying the rule
On the other hand, Article 95 of the Labor Code and its corresponding provision on ejusdem generis that general and unlimited terms are restrained and limited
in the IRR48 pertinently provides: by the particular terms that they follow xxx Clearly, petitioner's teaching
personnel cannot be deemed field personnel which refers "to non-agricultural
Art. 95. Right to service incentive. (a) Every employee who has rendered at least employees who regularly perform their duties away from the principal place of
one year of service shall be entitled to a yearly service incentive leave of five business or branch office of the employer and whose actual hours of work in the
days with pay. field cannot be determined with reasonable certainty. [Par. 3, Article 82, Labor
(b) This provision shall not apply to those who are already enjoying the benefit Code of the Philippines]. Petitioner's claim that private respondents are not
herein provided, those enjoying vacation leave with pay of at least five days and entitled to the service incentive leave benefit cannot therefore be sustained.
those employed in establishments regularly employing less than ten employees In short, the payment of an employee on task or pakyaw basis alone is
or in establishments exempted from granting this benefit by the Secretary of insufficient to exclude one from the coverage of SIL and holiday pay. They are
Labor and Employment after considering the viability or financial condition of exempted from the coverage of Title I (including the holiday and SIL pay) only
such establishment. [emphases ours] if they qualify as "field personnel." The IRR therefore validly qualifies and
xxxx limits the general exclusion of "workers paid by results" found in Article 82
from the coverage of holiday and SIL pay. This is the only reasonable
Section 1. Coverage. – This rule shall apply to all employees except: interpretation since the determination of excluded workers who are paid by
results from the coverage of Title I is "determined by the Secretary of Labor in
xxxx appropriate regulations."
(e) Field personnel and other employees whose performance is unsupervised by The Cebu Institute Technology ruling was reiterated in 2005 in Auto Bus
the employer including those who are engaged on task or contract basis, purely Transport Systems, Inc., v. Bautista:
commission basis, or those who are paid a fixed amount for performing work
irrespective of the time consumed in the performance thereof. [emphasis ours]
BAUTISTA, Coleen Joyce Q. Page 56 of 58
A careful perusal of said provisions of law will result in the conclusion that the Evidently, the Serrano ruling speaks only of SIL pay. However, if the LA and the
grant of service incentive leave has been delimited by the Implementing Rules NLRC had only taken counsel from Serrano and earlier cases, they would have
and Regulations of the Labor Code to apply only to those employees not correctly reached a similar conclusion regarding the payment of holiday pay
explicitly excluded by Section 1 of Rule V. According to the Implementing since the rule exempting "field personnel" from the grant of holiday pay is
Rules, Service Incentive Leave shall not apply to employees classified as "field identically worded with the rule exempting "field personnel" from the grant of
personnel." The phrase "other employees whose performance is unsupervised by SIL pay. To be clear, the phrase "employees engaged on task or contract basis
the employer" must not be understood as a separate classification of employees "found in the IRR on both SIL pay and holiday pay should be read together with
to which service incentive leave shall not be granted. Rather, it serves as an the exemption of "field personnel."
amplification of the interpretation of the definition of field personnel under the
Labor Code as those "whose actual hours of work in the field cannot be In short, in determining whether workers engaged on "pakyaw" or task basis" is
determined with reasonable certainty." entitled to holiday and SIL pay, the presence (or absence) of employer
supervision as regards the worker’s time and performance is the key: if the
The same is true with respect to the phrase "those who are engaged on task or worker is simply engaged on pakyaw or task basis, then the general rule is that
contract basis, purely commission basis." Said phrase should be related with he is entitled to a holiday pay and SIL pay unless exempted from the exceptions
"field personnel," applying the rule on ejusdem generis that general and specifically provided under Article 94 (holiday pay) and Article95 (SIL pay) of
unlimited terms are restrained and limited by the particular terms that they the Labor Code. However, if the worker engaged on pakyaw or task basis also
follow. falls within the meaning of "field personnel" under the law, then he is not
entitled to these monetary benefits.
The Autobus ruling was in turn the basis of Serrano v. Santos Transit which the
CA cited in support of granting Macasio’s petition. Macasio does not fall under the classification of "field personnel"
In Serrano, the Court, applying the rule on ejusdem generis50 declared that Based on the definition of field personnel under Article 82, we agree with the
"employees engaged on task or contract basis xxx are not automatically CA that Macasio does not fall under the definition of "field personnel." The CA’s
exempted from the grant of service incentive leave, unless, they fall under the finding in this regard is supported by the established facts of this case: first,
classification of field personnel."51 The Court explained that the phrase Macasio regularly performed his duties at David’s principal place of business;
"including those who are engaged on task or contract basis, purely commission second, his actual hours of work could be determined with reasonable certainty;
basis" found in Section 1(d), Rule V of Book III of the IRR should not be and, third, David supervised his time and performance of duties. Since Macasio
understood as a separate classification of employees to which SIL shall not be cannot be considered a "field personnel," then he is not exempted from the grant
granted. Rather, as with its preceding phrase - "other employees whose of holiday, SIL pay even as he was engaged on "pakyaw" or task basis.
performance is unsupervised by the employer" - the phrase "including those who
are engaged on task or contract basis" serves to amplify the interpretation of the Not being a "field personnel," we find the CA to be legally correct when it
Labor Code definition of "field personnel" as those "whose actual hours of work reversed the NLRC’s ruling dismissing Macasio’s complaint for holiday and SIL
in the field cannot be determined with reasonable certainty." pay for having been rendered with grave abuse of discretion.

In contrast and in clear departure from settled case law, the LA and the NLRC Entitlement to 13th month pay
still interpreted the Labor Code provisions and the IRR as exempting an With respect to the payment of 13th month pay however, we find that the CA
employee from the coverage of Title I of the Labor Code based simply and legally erred in finding that the NLRC gravely abused its discretion in denying
solely on the mode of payment of an employee. The NLRC’s utter disregard of this benefit to Macasio.1âwphi1
this consistent jurisprudential ruling is a clear act of grave abuse of discretion.
52 In other words, by dismissing Macasio’s complaint without considering
The governing law on 13th month pay is PD No. 851.53
whether Macasio was a "field personnel" or not, the NLRC proceeded based on a
significantly incomplete consideration of the case. This action clearly smacks of As with holiday and SIL pay, 13th month pay benefits generally cover all
grave abuse of discretion. employees; an employee must be one of those expressly enumerated to be
exempted. Section 3 of the Rules and Regulations Implementing P.D. No.
Entitlement to holiday pay 85154enumerates the exemptions from the coverage of 13th month pay benefits.
Under Section 3(e), "employers of those who are paid on xxx task basis, and

BAUTISTA, Coleen Joyce Q. Page 57 of 58


those who are paid a fixed amount for performing a specific work, irrespective The Arbitration Branch ruled that Petitioners were regular employees, and
of the time consumed in the performance thereof"55 are exempted. ordered Respondents to reinstate the Petitioners. 

The NLRC affirmed the ruling, but the CA overturned the decision.

Note that unlike the IRR of the Labor Code on holiday and SIL pay, Section 3(e)
of the Rules and Regulations Implementing PD No. 851 exempts employees
"paid on task basis" without any reference to "field personnel." This could only ISSUE: W/N Petitioners are regular employees of Respondents.

mean that insofar as payment of the 13th month pay is concerned, the law did
not intend to qualify the exemption from its coverage with the requirement that
the task worker be a "field personnel" at the same time. RULING: Yes.

Of the criteria to determine whether there is an employer-employee relationship,
WHEREFORE, in light of these considerations, we hereby PARTIALLY the so-called "control test" is generally regarded as the most crucial and
GRANT the petition insofar as the payment of 13th month pay to respondent is determinative indicator of the said relationship. 

concerned. In all other aspects, we AFFIRM the decision dated November 22, Under this test, an employer-employee relationship is said to exist where the
2010 and the resolution dated January 31, 2011 of the Court of Appeals in CA- person for whom the services are performed reserves the right to control not only
G.R. SP No. 116003. the end result but also the manner and means utilized to achieve the same.

Notwithstanding the nomenclature of their Talent Contracts and/or Project
SO ORDERED. Assignment Forms and the terms and condition embodied therein, petitioners are
regular employees of ABS-CBN. 

As cameramen, editors and reporters, it appears that Petitioners were subject to
Begino vs ABSCBN the control and supervision of Respondents which provided them with the
equipment essential for the discharge of their functions. The exclusivity clause

 and prohibitions in their Talent Contract were likewise indicative of
Respondent ABS-CBN, through Respondent Villafuerte, engaged the services of Respondents' control over them, however obliquely worded. 

Petitioners as cameramen, editors or reporters for TV Broadcasting. Petitioners Also,the presumption is that when the work done is an integral part of the
signed regularly renewed Talent Contracts (3 months - 1 year) and Project regular business of the employer and when the worker does not furnish an
Assignment Forms which detailed the duration, budget and daily technical independent business or professional service, such work is a regular employment
requirements of a particular project. Petitioners were tasked with coverage of of such employee and not an independent contractor.
news items for subsequent daily airings in Respondents’ TV Patrol Bicol
Program.

The Talent Contract has an exclusivity clause and provides that nothing therein
shall be deemed or construed to establish an employer-employee relationship
between the parties.

Petitioners filed against Respondents a complaint for regularization before the
NLRC's Arbitration branch. 

In support of their complaint, Petitioners claimed that they worked under the
direct control of Respondent Villafuerte - they were mandated to wear company
IDs, they were provided the necessary equipment, they were informed about the
news to be covered the following day, and they were bound by the company’s
policy on attendance and punctuality.

Respondents countered that, pursuant to their Talent Contracts and Project
Assignment Forms, Petitioners were hired as talents to act as reporters, editors
and/or cameramen. Respondents further claimed they never imposed control as
to how Petitioners discharged their duties. At most, they were briefed regarding
the general requirements of the project to be executed.

While the case was pending, Petitioners contracts were terminated, prompting
the latter to file a second complaint for illegal dismissal. 

BAUTISTA, Coleen Joyce Q. Page 58 of 58